Registration No. 2-69719
File No. 811-3105
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 37 /X/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT
OF 1940 /X/
Amendment No. 30 /X/
Oppenheimer Capital Appreciation Fund
(formerly named "Oppenheimer Target Fund")
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(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
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(Address of Principal Executive Offices)
212-323-0200
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(Registrant's Telephone Number)
ANDREW J. DONOHUE, ESQ.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
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(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ / On ___________________, pursuant to paragraph (b)
/ / 60 days after filing, pursuant to paragraph (a)(1)
/X/ On November 1, 1997, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a)(2)
/ / On _______, pursuant to paragraph (a)(2)
of Rule 485.
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The Registrant has registered an indefinite number of shares under
the Securities Act of 1933 pursuant to Rule 24f-2 promulgated under
the Investment Company Act of 1940. A Rule 24f-2 Notice for the
Registrant's fiscal year ended August 31, 1997 will be filed by
October 31, 1997.
<PAGE>
FORM N-1A
OPPENHEIMER CAPITAL APPRECIATION FUND
(formerly named "Oppenheimer Target Fund")
Cross Reference Sheet
Part A of
Form N-1A
Item No. Prospectus Heading
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1 Front Cover Page
2 Expenses; Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; How the Fund is Managed --
Organization and History; Investment Objective and
Policies
5 How the Fund is Managed; Back Cover; Expenses
5A Performance of the Fund
6 How the Fund is Managed -- Organization and History;
The Transfer Agent; Dividends, Capital Gains and Taxes
7 Shareholder Account Rules and Policies; How to Buy
Shares; How to Exchange Shares; Service Plan for Class
A Shares; Distribution and Service Plans for Class B
and Class C Shares; Special Investor Services; How to
Sell Shares
8 How to Sell Shares; Special Investor Services
9 *
Part B of
Form N-1A
Item No. Heading in Statement of Additional Information
- --------- ----------------------------------------------
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other Investment
Techniques and Strategies; Additional Investment
Restrictions
14 How the Fund is Managed - Trustees and Officers of the
Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and Service
Plans
17 Brokerage Policies of the Fund
18 Additional Information About the Fund
19 Your Investment Account - How to Buy Shares; How to
Sell Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of the
Fund; Additional Information About the Fund
22 Performance of the Fund
23 Financial Statements
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* Not applicable or negative answer.
<PAGE>
O P P E N H E I M E R
Capital Appreciation Fund
(formerly named "Oppenheimer Target Fund")
Prospectus dated November 1,1997
Oppenheimer Capital Appreciation Fund is a mutual fund that seeks
capital appreciation as its investment objective. The Fund
emphasizes investment in securities of "growth-type" companies, and
cyclical industries that the Fund's investment manager believes
have opportunities for capital growth. The Fund does not invest to
earn current income to distribute to shareholders. The Fund
invests mainly in common stocks, preferred stocks, and convertible
securities. The Fund may use "hedging" instruments, to seek to
reduce the risks of market fluctuations that affect the value of
the securities the Fund holds.
Some investment techniques the Fund uses may be considered to be
speculative investment methods that may increase the risks of
investing in the Fund and may also increase the Fund's operating
costs. You should carefully review the risks associated with an
investment in the Fund. Please refer to "Investment Objective and
Policies" for more information about the types of securities the
Fund invests in and refer to "Investment Risks" for a discussion of
the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and
keep it for future reference. You can find more detailed
information about the Fund in the November 1, 1997, Statement of
Additional Information. For a free copy, call OppenheimerFunds
Services, the Fund's Transfer Agent, at 1-800-525-7048, or write to
the Transfer Agent at the address on the back cover. The Statement
of Additional Information has been filed with the Securities and
Exchange Commission and is incorporated into this Prospectus by
reference (which means that it is legally part of this Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are
not guaranteed by any bank, are not insured by the F.D.I.C. or any
other agency, and involve investment risks, including the possible
loss of the principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
Investment Risks
Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Class Y Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other
services, and those expenses are subtracted from the Fund's assets
to calculate the Fund's net asset value per share. All
shareholders therefore pay those expenses indirectly. Shareholders
pay other expenses directly, such as sales charges and account
transaction charges. The following tables are provided to help you
understand your direct expenses of investing in the Fund and your
share of the Fund's business operating expenses that you will bear
indirectly.
Shareholder Transaction Expenses are charges you pay when you
buy or sell shares of the Fund. Please refer to "About Your
Account" from pages __ through __ for an explanation of how and
when these charges apply.
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Maximum Sales Charge 5.75% None None None
on Purchases (as a % of
offering price)
Maximum Deferred Sales None(1) 5% in the first 1% if shares None
Charge (as a % of the year, declining are redeemed
lower of the original to 1% in the within 12 months
purchase price or sixth year and of purchase(2)
redemption proceeds) eliminated
thereafter(2)
Maximum Sales Charge on None None None None
on Reinvested Dividends
Redemption Fee None(3) None(3) None(3) None(3)
Exchange Fee None None None None
</TABLE>
____________________
1. If you invest $1 million or more ($500,000 or more for purchases
by "Retirement Plans," as defined in "Class A Contingent Deferred
Sales Charge on page __) in Class A shares, you may have to pay a
sales charge of up to 1% if you sell your shares within 12 calendar
months (18 months for shares purchased prior to May 1, 1997) from
the end of the calendar month during which you purchased those
shares. See "How to Buy Shares -- Buying Class A Shares," below.
2. See "How to Buy Shares - Buying Class B Shares" and "How to Buy
Shares - Buying Class C Shares," below, for more information on the
contingent deferred sales charges.
3. There is a $10 transaction fee for redemptions paid by Federal
Funds wire, but not for redemptions paid by ACH transfer through
AccountLink. See "How to Sell Shares."
Annual Fund Operating Expenses are paid out of the Fund's
assets and represent the Fund's expenses in operating its business.
For example, the Fund pays management fees to its investment
adviser, OppenheimerFunds, Inc. (which is referred to in this
Prospectus as the "Manager"). The rates of the Manager's fees are
set forth in "How the Fund is Managed," below. The Fund has other
regular expenses for services, such as transfer agent fees,
custodial fees paid to the bank that holds the Fund's portfolio
securities, audit fees and legal expenses. Those expenses are
detailed in the Fund's Financial Statements in the Statement of
Additional Information.
Annual Fund Operating Expenses (as a Percentage of Average Net Assets):
<TABLE>
<CAPTION>
Class A Class B Class C Class Y
Shares Shares Shares Shares
<S> <C> <C> <C> <C>
Management Fees ____% ____% ____% ____%
12b-1 Plan Fees ____% ____% ____% ____%
Other Expenses ____% ____% ____% ____%
Total Fund Operating Expenses ____% ____% ____% ____%
</TABLE>
The numbers for Class A, Class B and Class C shares in the
chart above are based upon the Fund's expenses in its last fiscal
period ended August 31, 1997. These amounts are shown as a
percentage of the average net assets of each class of the Fund's
shares for that period, and have been annualized. The actual
expenses for each class of shares in future years may be more or
less than the numbers in the chart, depending on a number of
factors, including changes in the actual amount of the assets
represented by each class of shares. Class Y shares were not
available during the fiscal year ended August 31, 1997. Therefore,
the annual Fund Operating Expenses for Class Y shares are based on
amounts that would have been payable in that period assuming that
Class Y shares were outstanding during the entire fiscal year.
The "12b-1 Plan Fees" for Class A shares are the service fees.
For Class B and Class C shares, the "12b-1 Plan Fees" are the
service fees and the asset-based sales charge. The service fee for
each class is 0.25% of average annual net assets of the class and
the asset-based sales charge for Class B and Class C shares is
0.75%. These plans are described in greater detail in "How to Buy
Shares."
Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples
shown below. Assume that you make a $1,000 investment in each
class of shares of the Fund, and that the Fund's annual return is
5%, and that its operating expenses for each class are the ones
shown in the Annual Fund Operating Expenses table above. If you
were to redeem your shares at the end of each period shown below,
your investment would incur the following expenses by the end of 1,
3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $__ $__ $__ $__
Class B Shares $__ $__ $__ $__
Class C Shares $__ $__ $__ $__
Class Y Shares $__ $__ $__ $__
If you did not redeem your investment, it would incur the following
expenses:
1 year 3 years 5 years 10 years*
Class A Shares $__ $__ $__ $__
Class B Shares $__ $__ $__ $__
Class C Shares $__ $__ $__ $__
Class Y Shares $__ $__ $__ $__
*In the first example, expenses include the Class A initial sales
charge and the applicable Class B or Class C contingent deferred
sales charge. In the second example, Class A expenses include the
initial sales charge, but Class B and Class C expenses do not
include contingent deferred sales charges. The Class B expenses in
years 7 through 10 are based on the Class A expenses shown above,
because the Fund automatically converts your Class B shares into
Class A shares after 6 years. Because of the effect of the asset-
based sales charge and the contingent deferred sales charge imposed
on Class B and Class C shares long-term holders of Class B and
Class C shares could pay the economic equivalent of more than the
maximum front-end sales charge allowed under applicable
regulations. For Class B shareholders, the automatic conversion of
Class B shares to Class A shares is designed to minimize the
likelihood that this will occur. Please refer to "How to Buy
Shares - Buying Class B Shares" for more information.
These examples show the effect of expenses on an investment,
but are not meant to state or predict actual or expected costs or
investment returns of the Fund, all of which may be more or less
than those shown.
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more
complete information can be found. You should carefully read the
entire Prospectus before making a decision about investing in the
Fund. Keep the Prospectus for reference after you invest,
particularly for information about your account, such as how to
sell or exchange shares.
What Is The Fund's Investment Objective? The Fund's
investment objective is to seek capital appreciation.
What Does the Fund Invest In? To seek capital appreciation,
the Fund primarily invests in common stocks, preferred stocks, and
convertible securities. The Fund may also write covered calls and
use certain types of "hedging instruments" and "derivative
investments" to seek to reduce the risks of market fluctuations
that affect the value of the securities the Fund holds. These
investments are more fully explained in "Investment Objective and
Policies" starting on page __.
Who Manages the Fund? The Fund's investment adviser (the
"Manager") is OppenheimerFunds, Inc. The Manager, (including
subsidiaries), manages investment company portfolios having over
$__ billion in assets at ____________, 1997. The Manager is paid
an advisory fee by the Fund, based on its net assets. The Fund's
portfolio manager, Jane Putnam, is employed by the Manager and is
primarily responsible for the selection of the Fund's securities.
The Fund's Board of Trustees, elected by shareholders, oversees the
investment adviser and the portfolio manager. Please refer to "How
the Fund is Managed," starting on page for more information
about the Manager and its fees.
How Risky is the Fund? All investments carry risks to some
degree. The Fund is designed for investors who are willing to
accept greater risks of loss in the hopes of greater gains, and is
not intended for those who desire assured income and preservation
of capital. The Fund emphasizes investments in "growth" stocks
that tend to be more volatile than other equity investments. The
Fund's investments in stocks are subject to changes in their value
from a number of factors, such as changes in general stock market
movements or changes in value of particular stocks because of an
event affecting the issuer. These changes affect the value of the
Fund's investments and its prices per share. The Fund's
investments in foreign securities are subject to additional risks
not associated with domestic investments, such as the risk of
adverse currency fluctuation and risks associated with investment
in underdeveloped countries and markets. Hedging instruments and
derivative investments involve certain risks, as discussed under
"Hedging" and "Derivative Investments," below. The Fund may borrow
money from banks to buy securities, a practice known as leverage
that is subject to certain risks discussed below under "Special
Risks - Borrowing for Leverage."
The Fund may be viewed as an aggressive growth fund, and is
generally expected to be more volatile than the other stock funds,
the income and growth funds and the more conservative income funds
in the Oppenheimer funds spectrum. While the Manager tries to
reduce risks by diversifying investments, by carefully researching
securities before they are purchased for the portfolio, and in some
cases by using hedging techniques, there is no guarantee of success
in achieving the Fund's objective and your shares may be worth more
or less than their original cost when you redeem them. Please
refer to "Investment Risks" starting on page for a more complete
discussion of the Fund's investment risks.
How Can I Buy Shares? You can buy shares through your
dealer or financial institution, or you can purchase shares
directly through the Distributor by completing an Application or by
using an Automatic Investment Plan under AccountLink. Please refer
to "How to Buy Shares" on page for more details.
Will I Pay a Sales Charge to Buy Shares? The Fund offers
three classes of shares. Each class of shares has the same
investment portfolio but different expenses. Class A shares are
offered with a front-end sales charge, starting at 5.75%, and
reduced for larger purchases. Class B shares and Class C shares
are offered without a front-end sales charge, but may be subject to
a contingent deferred sales charge if redeemed within 6 years or 12
months, respectively, of purchase. There is also an annual asset-
based sales charge on Class B shares and Class C shares. Please
review "How to Buy Shares" starting on page _ for more details,
including a discussion about factors you and your financial advisor
should consider in determining which class may be appropriate for
you.
How Can I Sell My Shares? Shares can be redeemed by mail or
by telephone call to the Transfer Agent on any business day, or
through your dealer. Please refer to "How to Sell Shares" on page
__. The Fund also offers exchange privileges to other Oppenheimer
funds, described in "How to Exchange Shares" on page __.
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data and expense
ratios and other data based on the Fund's average net assets. This
information has been audited by KPMG Peat Marwick LLP, the Fund's
independent auditors, whose report on the Fund's financial
statements for the fiscal period ended August 31, 1997, is included
in the Statement of Additional Information. Class Y shares were
not publicly offered during any of the periods shown; therefore
information on this class of shares is not included in the tables
below or in the Fund's other financial statements.
Investment Objective and Policies
Objective. The Fund invests its assets to seek capital appreciation
for shareholders. The Fund does not invest to seek current income
to pay to shareholders.
Investment Policies and Strategies. The Fund seeks its investment
objective by emphasizing investment in securities considered by the
Manager to have appreciation possibilities, primarily common stocks
or other equity securities, including convertible securities, of
"growth-type" issuers, and may hold warrants and rights. These may
include securities of U.S. companies or foreign companies, as
discussed below.
The Manager looks for securities that it believes may
appreciate in value. In general, the Manager believes that capital
appreciation possibilities are more likely to be found in the
securities of "growth-type" companies. The Fund seeks superior
earnings growth characteristics with respect to its entire
portfolio. The Fund may invest in companies of any size and
capitalization, and at times the Manager may emphasize investment
in companies in particular ranges of size.
The Fund may also seek to take advantage of changes in the
business cycle by investing in companies that are sensitive to
those changes, if the Manager believes they present opportunities
for long-term growth. For example, when the economy is expanding,
companies in the consumer durable and technology sectors may be in
a position to benefit from changes in the business cycle and may
present long-term growth opportunities.
When investing the Fund's assets, the Manager considers many
factors, including general economic conditions in the U.S. relative
to foreign economies, and the trends in domestic and foreign stock
markets. The Fund may try to hedge against losses in the value of
its portfolio of securities by using hedging strategies described
below.
When market conditions are unstable, the Fund may invest
substantial amounts of its assets in debt securities, such as money
market instruments or government securities, as described below.
The Fund's portfolio manager may employ special investment
techniques in selecting securities for the Fund. These are also
described below. Additional information may be found about them
under the same headings in the Statement of Additional Information.
What Are "Growth-Type " Companies? These tend to be either
newer companies that may be developing new products or services, or
expanding into new markets for their products or dominant companies
in growing industries that are growing even faster than the
industry through market share gains. Growth-type companies normally
retain a large part of their earnings for research, development and
investment in capital assets. Therefore, they tend not to
emphasize the payment of dividends.
Can the Fund's Investment Objective and Policies Change?
The Fund has an investment objective, which is described above, as
well as investment policies it follows to try to achieve its
objective. Additionally, the Fund uses certain investment
techniques and strategies in carrying out those investment
policies. The Fund's investment policies and techniques are not
"fundamental" unless this Prospectus or the Statement of Additional
Information says that a particular policy is "fundamental." The
Fund's investment objective is a fundamental policy.
Fundamental policies are those that cannot be changed without
the approval of a "majority" of the Fund's outstanding voting
shares. The term "majority" is defined in the Investment Company
Act to be a particular percentage of outstanding voting shares (and
this term is explained in the Statement of Additional Information).
The Fund's Board of Trustees may change non-fundamental policies
without shareholder approval, although significant changes will be
described in amendments to this Prospectus.
Portfolio Turnover. A change in the securities held by the
Fund is known as "portfolio turnover." The Fund may engage
frequently in short-term trading to try to achieve its objective.
As a result, the Fund's portfolio turnover may be higher than other
mutual funds, although it is not expected to be more than 100% each
year. The "Financial Highlights," above, show the Fund's portfolio
turnover rate during past fiscal years.
High portfolio turnover and short-term trading may cause the
Fund to have relatively larger commission expenses and transaction
costs than funds that do not engage in short-term trading.
Additionally, high portfolio turnover may affect the ability of the
Fund to qualify as a "regulated investment company" under the
Internal Revenue Code for tax deductions for dividends and capital
gains distributions the Fund pays to shareholders. The Fund
qualified in its last fiscal year and intends to do so in the
coming year, although it reserves the right not to qualify.
Investment Risks
All investments carry risks to some degree, whether they are
risks that market prices of the investment will fluctuate (this is
known as "market risk") or that the underlying issuer will
experience financial difficulties and may default on its obligation
under a fixed-income investment to pay interest and repay principal
(this is referred to as "credit risk"). These general investment
risks, and the special risks of certain types of investments that
the Fund may hold are described below. They affect the value of
the Fund's investments, its investment performance, and the prices
of its shares. These risks collectively form the risk profile of
the Fund.
Because of the types of securities the Fund invests in and the
investment techniques the Fund uses, the Fund is designed for
investors who are investing for the long term. It is not intended
for investors seeking assured income or preservation of capital.
While the Manager tries to reduce risks by diversifying
instruments, by carefully researching securities before they are
purchased, and in some cases by using hedging techniques, changes
in overall market prices can occur at any time, and because the
income earned on securities is subject to change, there is no
assurance that the Fund will achieve its investment objective.
When you redeem your shares, they may be worth more or less that
what you paid for them.
Stock Investment Risks. Because the Fund may invest a
substantial portion (or all) of its assets in stocks, the value of
the Fund's portfolio will be affected by changes in the stock
markets. At times, the stock markets can be volatile and stock
prices can change substantially. This market risk will affect the
Fund's net asset values per share, which will fluctuate as the
values of the Fund's portfolio securities change. Not all stock
prices change uniformly or at the same time, not all stock markets
move in the same direction at the same time, and other factors can
affect a particular stock's prices (for example, poor earnings
reports by an issuer, loss of major customers, major litigation
against an issuer, changes in government regulations affecting an
industry). Not all of these factors can be predicted. The Fund
attempts to limit market risks by diversifying its investments,
that is, by not holding a substantial amount of the stock of any
one company and by not investing too great a percentage of the
Fund's assets in any one company. Also, the Fund does not
concentrate its investments in any one industry or group of
industries.
Foreign Securities Have Special Risks. While foreign
securities offer special investment opportunities, there are also
special risks. The change in value of a foreign currency against
the U.S. dollar will result in a change in the U.S. dollar value of
securities denominated in that foreign currency. Foreign issuers
are not subject to the same accounting and disclosure requirements
that U.S. companies are subject to. The value of foreign
investments may be affected by exchange control regulations,
expropriation or nationalization of a company's assets, foreign
taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or
other political and economic factors. More information about the
risks and potential rewards of investing in foreign securities is
contained in the Statement of Additional Information.
Hedging instruments can be volatile investments and may
involve special risks. The use of hedging instruments requires
special skills and knowledge of investment techniques that are
different than what is required for normal portfolio management.
If the Manager uses a hedging instrument at the wrong time or
judges market conditions incorrectly, hedging strategies may reduce
the Fund's return. The Fund could also experience losses if the
prices of its futures and options positions were not correlated
with its other investments or if it could not close out a position
because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has
special tax effects on the Fund. There are also special risks in
particular hedging strategies. For example, if a covered call
written by the Fund is exercised on a security that has increased
in value, the Fund will be required to sell the security at the
call price and will not be able to realize any profit if the
security has increased in value above the call price. If writing
a put, there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price. The use of forward
contracts may reduce the gain that would otherwise result from a
change in the relationship between the U.S. dollar and a foreign
currency. These risks are described in greater detail in the
Statement of Additional Information.
Investment Techniques and Strategies.
The Fund may also use the investment techniques and strategies
described below. These techniques involve certain risks. The
Statement of Additional Information contains more information about
these practices, including limitations on their use that are
designed to reduce some of the risks.
Borrowing for Leverage. The Fund may borrow up to 10% of the
value of its assets from banks to buy securities. That percentage
limit is a fundamental policy. The Fund will only borrow if it can
do so without putting up assets as security for a loan. This is a
speculative investment method known as "leverage." Leveraging may
subject the Fund to greater risks and costs than funds that do not
borrow. These risks may include the possible reduction of income
and increased fluctuation in the Fund's net asset value per share,
since the Fund pays interest on borrowings and interest expense
affects the Fund's share price. Borrowing is subject to regulatory
limits, described in more detail in the Statement of Additional
Information. Under the Investment Company Act, the Fund can borrow
only if it maintains at least a 300% ratio of assets to borrowings
at all time.
Warrants and Rights. Warrants basically are options to
purchase stock at set prices that are valid for a limited period of
time. Rights are similar to warrants but normally have a short
duration and are distributed directly by the issuer to its
shareholders. The Fund may invest up to 5% of its total assets in
warrants and rights. That 5% does not apply to warrants and rights
the Fund has acquired as part of units with other securities or
that are attached to other securities. No more than 2% of the
Fund's net assets may be invested in warrants and rights that are
not listed on the New York or American Stock Exchanges. For
further details about these investments, please refer to "Warrants
and Rights" in the Statement of Additional Information.
Domestic Debt Securities. The Fund may invest in debt
securities issued by U.S. companies in any type of industry.
Domestic debt securities may be denominated in U.S. dollars or in
non-U.S. currencies. The Fund is not required to limit those
investments to issuers having a particular size capitalization,
although it is expected that most will have total assets in excess
of $100 million. These investments may include debt obligations
such as bonds, debentures (unsecured bonds) and notes (including
variable and floating rate instruments described in "Investment
Objectives and Policies" in the Statement of Additional
Information), as well as the other investments discussed below.
These investments may also include sinking fund and callable bonds.
Foreign Securities. The Fund may purchase equity (and debt)
securities issued or guaranteed by foreign companies or foreign
governments, including foreign government agencies. The Fund may
buy securities of companies or governments in any country,
developed or underdeveloped. The Fund does not have any limit on
the amount of assets that may be invested in foreign securities.
However, the Fund normally does not expect to have more than 35% of
its total assets invested in foreign securities. Foreign currency
will be held by the Fund only in connection with the purchase or
sale of foreign securities.
Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that
have been in operation for less than three years, even after
including the operations of any predecessors. Securities of these
companies may have limited liquidity (which means that the Fund may
have difficulty selling them at an acceptable price when it wants
to) and the prices of these securities may be volatile. The Fund
currently intends to invest no more than 5% of its total assets in
the next year in securities of small, unseasoned issuers.
Special Situations. The Fund may invest in securities of
companies that are in "special situations" that the Manager
believes present opportunities for capital growth. A "special
situation" may be an event such as a proposed merger,
reorganization, or other unusual development that is expected to
occur and which may result in an increase in the value of a
company's securities regardless of general business conditions or
the movement of prices in the securities market as a whole. There
is a risk that the price of the security may decline if the
anticipated development fails to occur. There is no limit on the
amount of assets that the Fund may invest in "special situations."
Temporary Defensive Investments. When stock market prices
are falling or in other unusual economic or business circumstances,
the Fund may invest all or a portion of its assets in defensive
securities. Securities selected for defensive purposes may include
investment grade debt securities (securities rated at least "Baa"
by Moody's Investors Service, Inc. ("Moody's"), a nationally
recognized statistical rating organization, or at least "BBB" by
Standard & Poor's Corporation ("Standard & Poor's"), also a
nationally recognized statistical rating organization, or, if
unrated, judged by the Manager to be of comparable quality to
securities rated within such grades), and preferred stocks, cash or
cash equivalents, such as U.S. Treasury Bills and other short-term
obligations of the U.S. Government, its agencies or
instrumentalities, or commercial paper rated "A-1" or better by
Standard & Poor's or "P-1" or better by Moody's.
Hedging. The Fund may purchase and sell certain kinds of
futures contracts, put and call options, forward contracts, and
options on futures and broadly-based securities indices. These are
all referred to as "hedging instruments." The Fund does not use
hedging instruments for speculative purposes, and has limits on the
use of them, described below. The hedging instruments the Fund may
use are described below and in greater detail in "Other Investment
Techniques and Strategies" in the Statement of Additional
Information.
The Fund may buy and sell options, futures and forward
contracts for a number of purposes. It may do so to try to manage
its exposure to the possibility that the prices of its portfolio
securities may decline, or to establish a position in the
securities market as a temporary substitute for purchasing
individual securities. Some of these strategies, such as selling
futures, buying puts and writing covered calls, hedge the Fund's
portfolio against price fluctuations. Other hedging strategies,
such as buying futures and call options, tend to increase the
Fund's exposure to the securities market.
Forward contracts are used to try to manage foreign currency
risks on the Fund's foreign investments. Foreign currency options
may be used to try to protect against declines in the dollar value
of foreign securities the Fund owns, or to protect against an
increase in the dollar cost of buying foreign securities. Writing
covered call options may also provide income to the Fund for
liquidity purposes or defensive reasons.
Futures. The Fund may buy and sell futures contracts that
relate to (1) stock indices (referred to as Stock Index Futures),
(2) other securities indices (together with Stock Index Futures,
referred to as Financial Futures), (3) interest rates (these are
referred to as Interest Rate Futures), or (4) foreign currencies
(these are referred to as Forward Contracts). These types of
Futures are described in "Hedging with Options and Futures
Contracts" in the Statement of Additional Information.
Put and Call Options. The Fund may buy and sell certain
kinds of put options (puts) and call options (calls). A call or
put option may not be purchased if the value of all the Fund's put
and call options would exceed 5% of the Fund's total assets.
The Fund may buy calls on securities, broadly-based securities
indices, foreign currencies, Interest Rate Futures or Financial
Futures. The Fund may buy calls to terminate its obligation on a
call the Fund previously wrote. The Fund may write (that is, sell)
call options. When the Fund writes a call, it receives cash
(called a premium). Each call the Fund writes must be "covered"
while the call is outstanding. That means the Fund owns the
investment on which the call was written . The Fund may write
calls on Futures contracts it owns, but these calls must be covered
by securities or other liquid assets the Fund owns and segregates
to enable it to satisfy its obligations if the call is exercised.
After writing any call, not more than 25% of the Fund's total
assets may be subject to calls.
The Fund may buy and sell put options. The Fund can buy those
puts that relate to securities the Fund owns, broadly-based
securities indices, foreign currencies, or Interest Rate Futures or
Financial Futures (whether or not the Fund holds the particular
Future in its portfolio). Writing puts requires the segregation of
liquid assets to cover the put. The Fund will not write a put if
it will require more than 25% of the Fund's total assets to be
segregated to cover the put obligation.
The Fund may buy or sell foreign currency puts and calls only
if they are traded on a securities or commodities exchange or over-
the-counter market, or are quoted by recognized dealers in those
options.
Forward Contracts. Forward contracts are foreign currency
exchange contracts. The are used to buy or sell foreign currency
for future delivery at a fixed price. The Fund uses them to "lock
in" the U.S. dollar price of a security denominated in a foreign
currency that the Fund has bought or sold, or to protect against
possible losses from changes in the relative values of the U.S.
dollar and a foreign currency. The Fund may also use "cross-
hedging" where the Fund hedges against changes in currencies other
than the currency in which a security it holds is denominated.
Derivative Investments. In general, a "derivative
investment" is a specially designed investment. Its performance is
linked to the performance of another investment or security, such
as an option, future, index, currency or commodity. The Fund can
invest in a number of different kinds of "derivative investments."
They are used in some cases for hedging purposes and in other cases
to enhance total return. In the broadest sense, exchange-traded
options and futures contracts (discussed in "Hedging," above) may
be considered "derivative investments."
There are special risks in investing in derivative
investments. The company issuing the instrument may fail to pay
the amount due on the maturity of the instrument. Also, the
underlying investment or security on which the derivative is based,
and the derivative itself, might not perform the way the Manager
expected it to perform. The performance of derivative investments
may also be influenced by interest rate and stock market changes in
the U.S. and abroad. All of this can mean that the Fund will
realize less principal or income from the investment than expected.
Certain derivative investments held by the Fund may trade in the
over-the-counter market and may be illiquid. Please see "Illiquid
and Restricted Securities", below.
Illiquid and Restricted Securities. Under the policies
established by the Fund's Board of Trustees, the Manager determines
the liquidity of certain of the Fund's investments. Investments may
be illiquid because of the absence of an active trading market,
making it difficult to value them or dispose of them promptly at an
acceptable price. A restricted security is one that has a
contractual restriction on its resale or which cannot be sold
publicly until it is registered under the Securities Act of 1933.
The Fund currently intends to invest no more than 10% of its net
assets in illiquid or restricted securities (the Board may increase
that limit to 15%). The Fund's percentage limitation on these
investments does not apply to certain restricted securities that
are eligible for resale to qualified institutional purchasers. The
Manager monitors holdings of illiquid securities on an ongoing
basis and at times the Fund may be required to sell some holdings
to maintain adequate liquidity.
Loans of Portfolio Securities. To raise cash for liquidity
purposes, the Fund may lend its portfolio securities to brokers,
dealers and other types of financial institutions approved by the
Board of Trustees. The Fund must receive collateral for a loan.
After any loan, the value of the securities loaned must not exceed
25% of the value of the Fund's total assets and are subject to
other conditions described in the Statement of Additional
Information. The Fund presently does not intend to lend its
portfolio securities, but if it does, the value of the securities
loaned will exceed 5% of the value of its total assets in the
coming year.
Repurchase Agreements. The Fund may enter into repurchase
agreements to generate income for liquidity purposes to meet
anticipated redemptions, or pending the investment of proceeds from
sales of Fund shares or settlement of purchases of portfolio
investments. Repurchase agreements must be fully collateralized.
However, if the vendor of the securities fails to pay the resale
price on the delivery date, the Fund may incur costs in disposing
of the collateral, and losses if there is any delay in its ability
to do so. There is no limit on the amount of the Fund's net assets
that may be subject to repurchase agreements of seven days or less.
The Fund will not enter into a repurchase transaction that causes
more than 10% of its net assets to be subject to repurchase
agreements having a maturity of more than seven days.
Other Investment Restrictions
The Fund has certain investment restrictions that are fundamental
policies. Under these restrictions, the Fund cannot do any of the
following:
The Fund cannot, as to 75% of its assets, buy securities
issued or guaranteed by a single issuer if, as a result, the Fund
would have invested more than 5% of its total assets in the
securities of that issuer or would own more than 10% of the voting
securities of that issuer (purchases of securities of the U.S.
government, its agencies and instrumentalities are not restricted
by this policy).
The Fund cannot invest more than 25% of its total assets in
securities of companies in any one industry.
The Fund cannot invest in other open-end investment
companies or invest more than 5% of its net assets in closed-end
investment companies, including small business investment
companies, nor make any such investments at commission rates in
excess of normal brokerage commissions.
Unless the prospectus states that a percentage restriction
applies on an ongoing basis, it applies only at the time the Fund
makes an investment, and the Fund need not sell securities to meet
the percentage limits if the value of the investment increases in
proportion to the size of the Fund. Other investment restrictions
are listed in "Investment Restrictions" in the Statement of
Additional Information.
How the Fund is Managed
Organization and History. The Fund was organized in 1980 as a
Maryland corporation but was reorganized in 1987 as a Massachusetts
business trust. The Fund is an open-end, management investment
company.
The Fund is governed by a Board of Trustees, which is
responsible for protecting the interests of shareholders under
Massachusetts law. The Trustees meet periodically throughout the
year to oversee the Fund's activities, review its performance, and
review the actions of the Manager. "Trustees and Officers of the
Fund" in the Statement of Additional Information names the Trustees
and provides more information about them and the officers of the
Fund. Although the Fund will not normally hold annual meetings of
its shareholders, it may hold shareholder meetings from time to
time on important matters, and shareholders have the right to call
a meeting to remove a Trustee or to take other action described in
the Fund's Declaration of Trust.
The Board of Trustees has the power, without shareholder
approval, to divide unissued shares of the Fund into two or more
classes. The Board has done so, and the Fund currently has four
classes of shares, Class A, Class B, Class C and Class Y. All
classes invest in the same investment portfolio. Each class has
its own dividends and distributions and pays certain expenses which
may be different for the different classes. Each class may have a
different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally on matters
submitted to the vote of shareholders. Shares of each class may
have separate voting rights on matters in which interests of one
class are different from interests of another class, and only
shares of a particular class vote as a class on matters that affect
that class alone. Shares are freely transferrable.
The Manager and Its Affiliates. The Fund is managed by the
Manager, OppenheimerFunds, Inc., which is responsible for selecting
the Fund's investments, and handles its day-to-day business. The
Manager carries out its duties, subject to the policies established
by the Board of Trustees, under an Investment Advisory Agreement
which states the Manager's responsibilities. The Agreement sets
forth the fees paid by the Fund to the Manager and describes the
expenses that the Fund is responsible to pay to conduct its
business.
The Manager has operated as an investment adviser since 1959.
The Manager (including subsidiaries) currently manages investment
companies, including other Oppenheimer funds, with assets of more
than $__ billion as of ___________, 1997, and with more than __
million shareholder accounts. The Manager is owned by Oppenheimer
Acquisition Corp., a holding company that is owned in part by
senior officers of the Manager and controlled by Massachusetts
Mutual Life Insurance Company.
Portfolio Manager. The Portfolio Manager of the Fund is
Jane Putnam. She has been the person principally responsible for
the day-to-day management of the Fund's portfolio since July, 1995.
Ms. Putnam is a Vice President of the Manager. Previously she
served as a portfolio manager and equity research analyst for
Chemical Bank.
Fees and Expenses. Under the investment advisory agreement,
as amended per a resolution of the Board of Trustees dated December
14, 1995 to reduce the fee on assets in excess of $1.5 billion (the
"Investment Advisory Agreement"), the Fund pays the Manager a
monthly fee at the following annual rates, which may be higher than
the rates paid by some other mutual funds, and which decline on
additional assets as the Fund grows: 0.75% of the first $200
million of average annual net assets, 0.72% of the next $200
million, 0.69% of the next $200 million, 0.66% of the next $200
million, 0.60% of the next $700 million, and 0.50% of average
annual net assets in excess of $1.5 billion. The Fund's management
fee for its last fiscal period ended August 31, 1997 was ____% of
average annual net assets for Class A, Class B and Class C shares
of the Fund.
The Fund pays expenses related to its daily operations, such
as custodian fees, Trustees' fees, transfer agency fees, legal fees
and auditing costs. Those expenses are paid out of the Fund's
assets and are not paid directly by shareholders. However, those
expenses reduce the net asset value of shares, and therefore are
indirectly borne by shareholders through their investment. More
information about the Investment Advisory Agreement and the other
expenses paid by the Fund is contained in the Statement of
Additional Information.
There is also information about the Fund's brokerage policies
and practices in "Brokerage Policies of the Fund" in the Statement
of Additional Information. That section discusses how brokers and
dealers are selected for the Fund's portfolio transactions. When
deciding which brokers to use, the Manager is permitted by the
Investment Advisory Agreement to consider whether brokers have sold
shares of the Fund or any other funds for which the Manager serves
as investment adviser.
The Distributor. The Fund's shares are sold through
dealers, brokers and other financial institutions that have a sales
agreement with OppenheimerFunds Distributor, Inc., a subsidiary of
the Manager that acts as the Fund's Distributor. The Distributor
also distributes the shares of other "Oppenheimer funds" managed by
the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
The Transfer Agent. The Fund's Transfer Agent is
OppenheimerFunds Services, a division of the Manager, which acts as
the shareholder servicing agent for the Fund on an "at-cost" basis.
It also acts as the shareholder servicing agent for the other
Oppenheimer funds. Shareholders should direct inquiries about
their account to the Transfer Agent at the address and toll-free
number shown below in this Prospectus and on the back cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms
"total return" and "average annual total return" to illustrate its
performance. The performance of each class of shares is shown
separately, because the performance of each class of shares will
usually be different as a result of the different kinds of expenses
each class bears. These returns measure the performance of a
hypothetical account in the Fund over various periods, and do not
show the performance of each shareholder's account (which will vary
if dividends are received in cash or shares are sold or purchased).
The Fund's performance data may be useful to help you see how well
your investment has done over time and to compare it to market
indices, as we have done below.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be
predictions of future returns or performance. More detailed
information about how total returns are calculated is contained in
the Statement of Additional Information, which also contains
information about other ways to measure and compare the Fund's
performance. The Fund's investment performance will vary, depending
on market conditions, the composition of the portfolio, expenses
and which class of shares you purchase.
Total Returns. There are different types of "total returns"
used to measure the Fund's performance. Total return is the change
in value of a hypothetical investment in the Fund over a given
period, assuming that all dividends and capital gains distributions
are reinvested in additional shares. The cumulative total return
measures the change in value over the entire period (for example,
ten years). An average annual total return shows the average rate
of return for each year in a period that would produce the
cumulative total return over the entire period. However, average
annual total returns do not show the Fund's actual year-by-year
performance.
When total returns are quoted for Class A shares, normally the
current maximum initial sales charge has been deducted. When total
returns are shown for Class B or Class C shares, normally the
contingent deferred sales charge that applies to the period for
which total return is shown has been deducted. However total
returns may also be quoted at net asset value, without considering
the effect of the sales charge, and those returns would be less if
sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the
Manager of the Fund's performance during its fiscal period ended
August 31, 1997, followed by a graphical comparison of the Fund's
performance to an appropriate broad-based market index.
Management's Discussion of Performance. The Fund's
portfolio holdings, allocations and strategies are subject to
change.
Comparing the Fund's Performance to the Market. The graphs
below show the performance of a hypothetical $10,000 investment in
Class A, Class B and Class C shares of the Fund at August 31, 1997:
in the case of Class A shares, over a ten-year period; in the case
of Class B shares, from the inception of the class on November 1,
1995; and in the case of Class C shares, from the inception of the
class on December 1, 1993. Since Class Y shares are new as of the
date of this Prospectus, there are no comparisons shown for that
class. The Fund's performance reflects the deduction of the 5.75%
current maximum initial sales charge on Class A shares, the
applicable contingent deferred sales charge on Class B and Class C
shares, and reinvestment of all dividends and capital gains
distributions.
The Fund's performance is compared below to the performance of
the Standard & Poor's ("S&P") 500 Index, a broad-based index of
equity securities widely regarded as a general measure of the
performance of the U.S. equity securities market. Index
performance reflects the reinvestment of dividends but does not
consider the effect of capital gains or transaction costs, and none
of the data in the graphs below shows the effect of taxes.
Moreover, index performance data does not reflect any assessment of
the risk of the investments included in the index. The Fund's
performance reflects the effect of Fund business and operating
expenses. While index comparisons may be useful to provide a
benchmark for the Fund's performance, it must be noted that the
Fund's investments are not limited to the securities in the indices
shown.
Class A Shares
Comparison of Change in Value of $10,000 Hypothetical Investment
In: Oppenheimer Capital Appreciation Fund (Class A) Shares and S&P
500 Index
{Graph}
Average Annual Total Return of Class A shares of the Fund at
8/31/971
1 Year 5 Years 10 Years
_____% _____% _____%
Class B Shares
Comparison of Change in Value of $10,000 Hypothetical Investment
In: Oppenheimer Capital Appreciation Fund (Class B) Shares and S&P
500 Index
{Graph}
Cumulative Total Return of Class B Shares of the Fund at 8/31/972
Life
____%
Class C Shares
Comparison of Change in Value of $10,000 Hypothetical Investment
In: Oppenheimer Capital Appreciation Fund Class C Shares and S&P
500 Index
[Graph]
Average Annual Total Return of Class C shares at 8/31/973
1 Year Life
_____% _____%
The total returns and the ending account value in the graph reflect
reinvestment of all dividends and capital gains distributions. The
Fund's fiscal year has changed from 12/31 to 8/31.
1The inception date of the Fund (Class A shares) was 1/22/81. Class
A returns are shown net of the applicable 5.75% maximum initial
sales charge.
2Class B shares of the Fund were first publicly offered on 11/1/95.
The cumulative total return and the ending account value in the
graph are shown net of the applicable 5% contingent deferred sales
charge.
3Class C shares of the Fund were first publicly offered on 12/1/93.
The 1-year return is shown net of the applicable 1% contingent
deferred sales charge.
Past performance is not predictive of future performance.
Graphs are not drawn to same scale.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors four different
classes of shares. The different classes of shares represent
investments in the same portfolio of securities but are subject to
different expenses and will likely have different share prices.
Class A Shares. If you buy Class A shares, you may pay an
initial sales charge on investments up to $1 million (up to
$500,000 for purchases by "Retirement Plans," as defined in "Class
A Contingent Deferred Sales Charge" on page __). If you purchase
Class A shares as part of an investment of at least $1 million (at
least $500,000 for Retirement Plans) in shares of one or more
Oppenheimer funds, you will not pay an initial sales charge, but if
you sell any of those shares within 12 months of buying them (18
months if the shares were purchased prior to may 1, 1997), you may
pay a contingent deferred sales charge. The amount of that sales
charge will vary depending on the amount you invested. Sales
charge rates are described in "Buying Class A Shares" below.
Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
six years of buying them, you will normally pay a contingent
deferred sales charge. That sales charge varies depending on how
long you own your shares, as described in "Buying Class B Shares"
below.
Class C Shares. If you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within
12 months of buying them, you will normally pay a contingent
deferred sales charge of 1%, as discussed in "Buying Class C
Shares" below.
Class Y Shares. Class Y Shares are sold at net asset
value per share without the imposition of a sales charge at the
time of purchase to separate accounts of insurance companies and
other institutional investors ("Class Y Sponsors") having an
agreement ("Class Y Agreements") with the Manager or the
Distributor. The intent of Class Y Agreements is to allow tax
qualified institutional investors to invest indirectly (through
separate accounts of the Class Y sponsor) in Class Y shares of the
Fund and to allow institutional investors to invest directly in
Class Y Shares of the Fund. Individual investors are not permitted
to invest directly in Class Y shares. As of the date of this
Prospectus, Massachusetts Mutual Life Insurance Company (an
affiliate of the Manager and the Distributor) acts as Class Y
Sponsor for all outstanding Class Y shares of the Fund. While
Class Y shares are not subject to a contingent deferred sales
charge, asset-based sales charge or service fee, a Class Y Sponsor
may impose charges on separate accounts investing in Class Y
shares.
None of the instructions described elsewhere in this
Prospectus or the Statement of Additional Information for the
purchase, redemption, reinvestment, exchange or transfer of shares
of the Fund, the selection of classes of shares or the reinvestment
of dividends apply to its Class Y shares. Clients of Class Y
Sponsors must request their Sponsor to effect all transactions in
Class Y shares on their behalf.
Which Class of Shares Should You Choose? Once you decide that the
Fund is an appropriate investment for you, the decision as to which
class of shares is better suited to your needs depends on a number
of factors which you should discuss with your financial advisor.
The Fund's operating costs that apply to a class of shares and the
effect of the different types of sales charges on your investment
will vary your investment results over time. The most important
factors to consider are how much you plan to invest and how long
you plan to hold your investment. If your goals and objectives
change over time and you plan to purchase additional shares, you
should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your
financial advisor with a framework in which to choose a class, we
have made some assumptions using a hypothetical investment in the
Fund. We assumed you are an individual investor, and therefore
ineligible to purchase Class Y shares. We used the sales charge
rates that apply to each class considering the effect of the annual
asset-based sales charge on Class B and Class C expenses (which,
like all expenses, will affect your investment return). For the
sake of comparison, we have assumed that there is a 10% rate of
appreciation in the investment each year. Of course, the actual
performance of your investment cannot be predicted and will vary,
based on the Fund's actual investment returns and the operating
expenses borne by each class of shares, and which class of shares
you invest in.
The factors discussed below are not intended to be investment
advice, guidelines or recommendations, because each investor's
financial considerations are different. The discussion below of
the factors to consider in purchasing a particular class of shares
assumes that you will purchase only one class of shares and not a
combination of shares of different classes.
How Long Do You Expect to Hold Your Investment? While
future financial needs cannot be predicted with certainty, knowing
how long you expect to hold your investment will assist you in
selecting the appropriate class of shares. Because of the effect
of class-based expenses, your choice will also depend on how much
you plan to invest. For example, the reduced sales charges
available for larger purchases of Class A shares may, over time,
offset the effect of paying an initial sales charge on your
investment (which reduces the amount of your investment dollars
used to buy shares for your account), compared to the effect over
time of higher class-based expenses on Class B or Class C shares
for which no initial sales charge is paid.
Investing for the Short Term. If you have a short-term
investment horizon (that is, you plan to hold your shares for not
more than six years), you should probably consider purchasing Class
A or Class C shares rather than Class B shares, because of the
effect of the Class B contingent deferred sales charge if you
redeem in less than 7 years, as well as the effect of the Class B
asset-based sales charge on the investment return for that class in
the short term. Class C shares might be the appropriate choice
(especially for investments of less than $100,000), because there
is no initial sales charge on Class C shares, and the contingent
deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the
shorter term, then the more you invest and the more your investment
horizon increases toward six years, Class C shares might not be as
advantageous as Class A shares. That is because the annual asset-
based sales charge on Class C shares will have a greater impact on
your account over the longer term than the reduced front-end sales
charge available for larger purchases of Class A shares. For
example, Class A shares might be more advantageous than Class C (as
well as Class B) shares for investments of more than $100,000
expected to be held for 5 or 6 years (or more). For investments
over $250,000 expected to be held 4 to 6 years (or more), Class A
shares may become more advantageous than Class C (and Class B)
shares. If investing $500,000 or more, Class A shares may be more
advantageous as your investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most
cases Class A shares will be the most advantageous choice, no
matter how long you intend to hold your shares. For that reason,
the Distributor normally will not accept purchase orders of
$500,000 or more of Class B shares or $1 million or more of Class
C shares, from a single investor.
Investing for the Longer Term. If you are investing for the
longer term, for example, for retirement, and do not expect to need
access to your money for seven years or more, Class B shares may be
an appropriate consideration, if you plan to invest less than
$100,000. If you plan to invest more than $100,000 over the long
term, Class A shares will likely be more advantageous than Class B
shares or Class C shares, as discussed above, because of the effect
of the expected lower expenses for Class A shares and the reduced
initial sales charges available for larger investments in Class A
shares under the Fund's Right of Accumulation.
Of course these examples are based on approximations of the
effect of current sales charges and expenses on a hypothetical
investment over time, using the assumed annual performance returns
stated above, and therefore, you should analyze your options
carefully.
Are There Differences in Account Features That Matter to
You? Because some account features may not be available to Class
B or Class C shareholders, or other features (such as Automatic
Withdrawal Plans) might not be advisable (because of the effect of
contingent deferred sales charge) for Class B and Class C
shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares to buy.
Additionally, the dividends payable to Class B and Class C
shareholders will be reduced by the additional expenses borne
solely by that class, such as the Class B and Class C asset-based
sales charge described below and in the Statement of Additional
Information.
How Does It Affect Payments to My Broker? A salesperson,
such as a broker, or any other person who is entitled to receive
compensation for selling Fund shares may receive different
compensation for selling one class than for selling another class.
It is important that investors understand that the purpose of the
Class B and Class C contingent deferred sales charge and asset-
based sales charges is the same as the purpose of the front-end
sales charge on sales of Class A shares: to compensate the
Distributor for commissions it pays to dealers and financial
institutions for selling shares. The Distributor may pay
additional periodic compensation from its own resources to
securities dealers or financial institutions based upon the value
of shares of the Fund owned by the dealer or financial institution
for its own account as for its customers.
How Much Must You Invest? You can open a Fund account with a
minimum initial investment of $1,000 and make additional
investments at any time with as little as $25. There are reduced
minimum investments under special investment plans.
With Asset Builder Plans, Automatic Exchange Plans,
403(b)(7) custodial plans and military allotment plans, you can
make initial and subsequent investments of as little as $25; and
subsequent purchases of at least $25 can be made by telephone
through AccountLink.
Under pension, profit-sharing and 401(k) plans and
Individual Retirement Accounts (IRAs), you can make an initial
investment of as little as $250 (if your IRA is established under
an Asset Builder Plan, the $25 minimum applies), and subsequent
investments may be as little as $25.
There is no minimum investment requirement if you are buying
shares by reinvesting dividends or distributions from the Fund or
other Oppenheimer funds (a list of them appears in the Statement of
Additional Information, or you can ask your dealer or call the
Transfer Agent), or by reinvesting distributions from unit
investment trusts that have made arrangements with the Distributor.
How Are Shares Purchased? You can buy shares several ways --
through any dealer, broker or financial institution that has a
sales agreement with the Distributor, directly through the
Distributor or automatically from your bank account through an
Asset Builder Plan under the OppenheimerFunds AccountLink service.
The Distributor may appoint certain servicing agents as the
Distributor's agent to accept purchase and redemption orders. When
you buy shares, be sure to specify Class A, Class B or Class C
shares. If you do not choose, your investment will be made in
Class A shares.
Buying Shares Through Your Dealer. Your dealer will place
your order with the Distributor on your behalf.
Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box
5270, Denver, Colorado 80217. If you don't list a dealer on the
application, the Distributor will act as your agent in buying the
shares. However, we recommend that you discuss your investment
first with a financial advisor, to be sure that it is appropriate
for you.
Payments by Federal Funds Wire. Shares may be purchased by
Federal Funds wire. The minimum investment is $2,500. You must
first call the Distributor's Wire Department at 1-800-525-7041 to
notify the Distributor of the wire and receive further
instructions.
Buying Shares Through OppenheimerFunds AccountLink. You can
use AccountLink to link your Fund account with an account at a U.S.
bank or other financial institution that is an Automated Clearing
House (ACH) member. You can then transmit funds electronically to
purchase shares, to have the Transfer Agent send redemption
proceeds, or to transmit dividends and distributions to your bank
account.
Shares are purchased for your account through AccountLink the
regular business day the Distributor is instructed by you to
initiate the ACH transfer to buy shares. You can provide those
instructions automatically, under an Asset Builder Plan, described
below, or by telephone instructions using OppenheimerFunds
PhoneLink, also described below. You should request AccountLink
privileges on the application or dealer settlement instructions
used to establish your account. Please refer to "AccountLink" below
for more details.
Asset Builder Plans. You may purchase shares of the Fund
(and up to four other Oppenheimer funds) automatically each month
from your account at a bank or other financial institution under an
Asset Builder Plan with AccountLink. Details are in the Statement
of Additional Information.
At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales
charge that applies) that is next determined after the Distributor
receives the purchase order in Denver, Colorado. In most cases, to
enable you to receive that day's offering price, the Distributor or
its designated agent must receive your order by the time of day The
New York Stock Exchange closes, which is normally 4:00 P.M., New
York time, but may be earlier on some days (all references to time
in this Prospectus mean "New York time"). The net asset value of
each class of shares is determined as of that time on each day The
New York Stock Exchange is open (which is referred to in this
Prospectus as a "regular business day").
If you buy shares through a dealer, the dealer must receive
your order by the close of The New York Stock Exchange on a regular
business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which
is normally 5:00 P.M. The Distributor may reject any purchase
order for the Fund's shares, in its sole discretion.
Special Sales Charge Arrangements for Certain Persons. Appendix A
to this Prospectus sets forth conditions for the waiver of, or
exemption from, sales charges or the special sales charge rates
that apply to purchases of shares of the Fund (including purchases
by exchange) by a person who was a shareholder of one of the Former
Quest for Value Funds (as defined in that Appendix).
Buying Class A Shares. Class A shares are sold at their offering
price, which is normally net asset value plus an initial sales
charge. However, in some cases, described below, purchases are not
subject to an initial sales charge, and the offering price will be
the net asset value. In some cases, reduced sales charges may be
available, as described below. Out of the amount you invest, the
Fund receives the net asset value to invest for your account. The
sales charge varies depending on the amount of your purchase. A
portion of the sales charge may be retained by the Distributor and
allocated to your dealer as commission. The current sales charge
rates and commissions paid to dealers and brokers are as follows:
Front-End Front-End Commission
Sales Charge Sales Charge as Percentage
as Percentage of as Percentage of of Offering
Amount of Purchase Offering Price Amount Invested Price
- ------------------ ---------------- ---------------- -------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission
to dealers. If that occurs, the dealer may be considered an
"underwriter" under Federal securities laws.
Class A Contingent Deferred Sales Charge. There is no
initial sales charge on purchases of Class A shares of any one or
more of the Oppenheimer funds in the following cases:
Purchases aggregating $1 million or more;
Purchases by a retirement plan qualified under sections
401(a) or 401(k) of the Internal Revenue Code, by a non-qualified
deferred compensation plan (not including Section 457 plans),
employee benefit plan, group retirement plan (see "How to Buy
Shares - Retirement Plans" in the Statement of Additional
Information for further details), an employee's 403(b)(7) custodial
plan account, SEP IRA, SARSEP, or SIMPLE plan (all of these plans
are collectively referred to as "Retirement Plans"); that: (1) buys
shares costing $500,000 or more or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that
it projects to have annual plan purchases of $200,000 or more; or
Purchases by an OppenheimerFunds Rollover IRA if the
purchases are made (1) through a broker, dealer, bank or registered
investment adviser that has made special arrangements with the
Distributor for these purchases, or (2) by a direct rollover of a
distribution from a qualified retirement plan if the administrator
of that plan has made special arrangements with the Distributor for
those purchases.
Purchases by a retirement plan qualified under section
401(a) if the retirement plan has total plan assets of $500,000 or
more.
The Distributor pays dealers of record commissions on those
purchases in an amount equal to (I) 1.0% for non-Retirement Plan
accounts, and (ii) for Retirement Plan accounts, 1.0% of the first
$2.5 million, plus 0.50% of the next $2.5 million, plus 0.25% of
purchases over $5 million, calculated on a calendar year basis.
That commission will be paid only on those purchases that were not
previously subject to a front-end sales charge and dealer
commission. No sales commission will be paid to the dealer,
broker or financial institution on sales of Class A shares
purchased with the redemption proceeds of shares of a mutual fund
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor if the purchase occurs
more than 30 days after the addition of the Oppenheimer funds as an
investment option to the Retirement Plan.
If you redeem any of those shares purchased prior to May 1,
1997, within 18 months of the end of the calendar month of their
purchase, a contingent deferred sales charge (called the "Class A
contingent deferred sales charge") may be deducted from the
redemption proceeds. A Class A contingent deferred sales charge
may be deducted from the redemption proceeds of any of those shares
purchased on or after May 1, 1997 that are redeemed within 12
months of the end of the calendar month of their purchase. That
sales charge may be equal to 1.0% of the lesser of (1) the
aggregate net asset value of the redeemed shares (not including
shares purchased by reinvestment of dividends or capital gains
distributions) or (2) the original offering price (which is the
original net asset value) of the redeemed shares. However, the
Class A contingent deferred sales charge will not exceed the
aggregate amount of the commissions the Distributor paid to your
dealer on all Class A shares of all Oppenheimer funds you purchased
subject to the Class A contingent deferred sales charge.
In determining whether a contingent deferred sales charge is
payable, the Fund will first redeem shares that are not subject to
the sales charge, including shares purchased by reinvestment of
dividends and capital gains, and then will redeem other shares in
the order that you purchased them. The Class A contingent deferred
sales charge is waived in certain cases described in "Waivers of
Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on
exchanges of shares under the Fund's Exchange Privilege (described
below). However, if the shares acquired by exchange are redeemed
within 12 calendar months (18 months for shares purchased prior to
May 1, 1997)of the end of the calendar month of the purchase of the
exchanged shares, the contingent deferred sales charge will apply.
Special Arrangements With Dealers. The Distributor may
advance up to 13 months' commissions to dealers that have
established special arrangements with the Distributor for Asset
Builder Plans for their clients.
Reduced Sales Charges for Class A Share Purchases. You may be
eligible to buy Class A shares at reduced sales charge rates in one
or more of the following ways:
Right of Accumulation. To qualify for the lower sales
charge rates that apply to larger purchases of Class A shares, you
and your spouse can add together Class A and Class B shares you
purchase for your individual accounts, or jointly, or for trust or
custodial accounts on behalf of your children who are minors. A
fiduciary can count all shares purchased for a trust, estate or
other fiduciary account (including one or more employee benefit
plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class
A and Class B shares of the Fund and other Oppenheimer funds to
reduce the sales charge rate that applies to current purchases of
Class A shares. You can also include Class A and Class B shares of
Oppenheimer funds you previously purchased subject to an initial or
contingent deferred sales charge to reduce the sales charge rate
for current purchases of Class A shares, provided that you still
hold your investment in one of the Oppenheimer funds. The
Distributor will add the value, at current offering price, of the
shares you previously purchased and currently own to the value of
current purchases to determine the sales charge rate that applies.
The Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from
the Distributor. The reduced sales charge will apply only to
current purchases and must be requested when you buy your shares.
Letter of Intent. Under a Letter of Intent, if you purchase
Class A shares or Class A and Class B shares of the Fund and other
Oppenheimer funds during a 13-month period, you can reduce the
sales charge rate that applies to your purchases of Class A shares.
The total amount of your intended purchases of both Class A and
Class B shares will determine your reduced sales charge rate for
the Class A shares purchased during that period. This can include
purchases made up to 90 days before the date of the Letter. More
information is contained in the Application and in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers of Class A Sales Charges. The Class A sales charges
are not imposed in the circumstances described below. There is an
explanation of this policy in "Reduced Sales Charges" in the
Statement of Additional Information.
Waivers of Initial and Contingent Deferred Sales Charges for
Certain Purchasers. Class A shares purchased by the following
investors are not subject to any Class A sales charges:
the Manager or its affiliates;
present or former officers, directors, trustees and
employees (and their "immediate families" as defined in "Reduced
Sales Charges" in the Statement of Additional Information) of the
Fund, the Manager and its affiliates, and retirement plans
established by them for their employees;
registered management investment companies, or separate
accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose;
dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
employees and registered representatives (and their spouses)
of dealers or brokers described above or financial institutions
that have entered into sales arrangements with such dealers or
brokers (and are identified to the Distributor) or with the
Distributor; the purchaser must certify to the Distributor at the
time of purchase that the purchase is for the purchaser's own
account (or for the benefit of such employee's spouse or minor
children);
dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor providing
specifically for the use of shares of the Fund in particular
investment products made available to their clients (those clients
may be charged a transaction fee by their dealer, broker or adviser
for the purchase or sale of shares of the Fund;
employee benefit plans purchasing shares through a
shareholder agent which the Distributor has appointed as its agent
to accept those purchase orders;
(1) investment advisors and financial planners who charge an
advisory, consulting or other fee for their services and buy shares
for their own accounts or the accounts of their clients, (2)
Retirement Plans and deferred compensation plans and trusts used to
fund those Plans (including, for example, plans qualified or
created under sections 401(a), 403(b) or 457 of the Internal
Revenue Code), and "rabbi trusts" that buy shares for their own
accounts, in each case if those purchases are made through a broker
or agent or other financial intermediary that has made special
arrangements with the Distributor for those purchases; and (3)
clients of such investment advisors or financial planners who buy
shares for their own accounts may also purchase shares without
sales charge but only if their accounts are linked to a master
account of their investment advisor or financial planner on the
books and records of the broker, agent or financial intermediary
with which the Distributor has made such special arrangements (each
of these investors may be charged a fee by the broker, agent or
financial intermediary for purchasing shares);
directors, trustees, officers or full-time employees of
OpCap Advisors or its affiliates, their relatives or any trust,
pension, profit sharing or other benefit plan which beneficially
owns shares for those persons;
accounts for which Oppenheimer Capital is the investment
adviser (the Distributor must be advised of this arrangement) and
persons who are directors or trustees of the company or trust which
is the beneficial owner of such accounts;
any unit investment trust that has entered into an
appropriate agreement with the Distributor;
a TRAC-2000 401(k) plan (sponsored by the former Quest for
Value Advisors) whose Class B or Class C shares of a Former Quest
for Value Fund were exchanged for Class A shares of that Fund due
to the termination of the Class B and C TRAC-2000 program on
November 24, 1995; or
qualified retirement plans that had agreed with the former
Quest for Value Advisors to purchase shares of any of the Former
Quest for Value Funds at net asset value, with such shares to be
held through DCXchange, a sub-transfer agency mutual fund
clearinghouse, provided that such arrangements are consummated and
share purchases commence by December 31, 1996.
Waivers of Initial and Contingent Deferred Sales Charges in
Certain Transactions. Class A shares issued or purchased in the
following transactions are not subject to Class A sales charges:
shares issued in plans of reorganization, such as mergers,
asset acquisitions and exchange offers, to which the Fund is a
party;
shares purchased by the reinvestment of loan repayments by
a participant in a retirement plan for which the Manager or its
affiliates acts as sponsor;
shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds
(other than Oppenheimer Cash Reserves) or unit investment trusts
for which reinvestment arrangements have been made with the
Distributor;
shares purchased and paid for with the proceeds of shares
redeemed in the past 12 months from a mutual fund (other than a
fund managed by the Manager or any of its subsidiaries) on which an
initial sales charge or contingent deferred sales charge was paid
(this waiver also applies to shares purchased by exchange of shares
of Oppenheimer Money Market Fund, Inc. that were purchased and paid
for in this manner); this waiver must be requested when the
purchase order is placed for your shares of the Fund, and the
Distributor may require evidence of your qualification for this
waiver; or
shares purchased with the proceeds of maturing principal of
units of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for
Certain Redemptions. The Class A contingent deferred sales charge
is also waived if shares that would otherwise be subject to the
contingent deferred sales charge are redeemed in the following
cases:
to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account
Rules and Policies," below);
if, at the time of purchase of shares (prior to May 1, 1997)
the dealer agreed in writing to accept the dealer's portion of the
sales commission in installments of 1/18th of the commission per
month (and no further commission will be payable if the shares are
redeemed within 18 months of purchase);
if, at the time of purchase of shares (on or after May 1,
1997) the dealer agrees in writing to accept the dealer's portion
of the sales commission in installments of 1/12th of the commission
per month (and no further commission will be payable if the shares
are redeemed within 12 months of purchase);
for distributions from a TRAC-2000 401(k) plan sponsored by
the Distributor due to the termination of the TRAC-2000 program; or
for distributions from Retirement Plans, deferred
compensation plans or other employee benefit plans for any of the
following purposes: (1) following the death or disability (as
defined in the Internal Revenue Code) of the participant or
beneficiary (the death or disability must occur after the
participant's account was established); (2) to return excess
contributions; (3) to return contributions made due to a mistake of
fact; (4) hardship withdrawals, as defined in the plan; (5) under
a Qualified Domestic Relations Order, as defined in the Internal
Revenue Code; (6) to meet the minimum distribution requirements of
the Internal Revenue Code; (7) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal
Revenue Code; (8) for retirement distributions or loans to
participants or beneficiaries; (9) separation from service; (10)
participant-directed redemptions to purchase shares of a mutual
fund (other than a fund managed by the Manager or its subsidiary)
offered as an investment option in a Retirement Plan in which
Oppenheimer funds are also offered as investment options under a
special arrangement with the Distributor; or (11) plan termination
or "in-service distributions", if the redemption proceeds are
rolled over directly to an OppenheimerFunds IRA;
for distributions from Retirement Plans having 500 or more
eligible participants, except distributions due to termination of
all of the Oppenheimer funds as an investment option under the
Plan; and
for distributions from 401(k) plans sponsored by broker-
dealers that have entered into a special agreement with the
Distributor allowing this waiver.
Service Plan for Class A Shares. The Fund has adopted a
Service Plan for Class A shares to reimburse the Distributor for a
portion of its costs incurred in connection with the personal
service and maintenance of shareholder accounts that hold Class A
shares. Reimbursement is made quarterly at an annual rate that may
not exceed 0.25% of the average annual net assets of Class A shares
of the Fund. The Fund's Board of Trustees has set the annual rate
for assets representing shares of the Fund sold on or after April
1, 1991, at 0.25%, and has set the annual rate for assets
representing shares sold before April 1, 1991, at 0.15% (the Board
has the authority to increase that rate to no more than 0.25%).
The Distributor uses all of those fees to compensate dealers,
brokers, banks and other financial institutions quarterly for
providing personal service and maintenance of accounts of their
customers that hold Class A shares and to reimburse itself (if the
Fund's Board of Trustees authorizes such reimbursements, which it
has not yet done) for its other expenditures under the Plan.
Services to be provided include, among others, answering
customer inquiries about the Fund, assisting in establishing and
maintaining accounts in the Fund, making the Fund's investment
plans available and providing other services at the request of the
Fund or the Distributor. Payments are made by the Distributor
quarterly at an annual rate not to exceed 0.25% of the average
annual net assets of Class A shares held in accounts of the service
provider or its customers. The payments under the Plan increase
the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of
Additional Information.
Buying Class B Shares. Class B shares are sold at net asset
value per share without an initial sales charge. However, if Class
B shares are redeemed within 6 years of their purchase, a
contingent deferred sales charge will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by an
increase in net asset value over the initial purchase price. The
Class B contingent deferred sales charge is paid to the Distributor
to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sale of Class B shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 6 years, and (3)
shares held the longest during the 6-year period. The contingent
deferred sales charge is not imposed in the circumstances described
in "Waivers of Class B and Class C Sales Charges," below.
The amount of the contingent deferred sales charge will depend
on the number of years since you invested and the dollar amount
being redeemed, according to the following schedule:
Contingent Deferred Sales Charge
Years Since Beginning of Month In on Redemptions in that Year
Which Purchase Order Was Accepted (As % of Amount Subject to Charge)
- --------------------------------- ----------------------------------
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are
considered to have been made on the first regular business day of
the month in which the purchase was made.
Automatic Conversion of Class B Shares. 72 months after you
purchase Class B shares, those shares will automatically convert to
Class A shares. This conversion feature relieves Class B
shareholders of the asset-based sales charge that applies to Class
B shares under the Class B Distribution and Service Plan, described
below. The conversion is based on the relative net asset value of
the two classes, and no sales load or other charge is imposed. When
Class B shares convert, any other Class B shares that were acquired
by the reinvestment of dividends and distributions on the converted
shares will also convert to Class A shares. The conversion feature
is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C
Shares" in the Statement of Additional Information.
Distribution and Service Plan for Class B Shares. The Fund
has adopted a Distribution and Service Plan for Class B shares to
compensate the Distributor for distributing Class B shares and
servicing accounts. This Plan is described below under "Buying
Class C Shares - Distribution and Service Plans for Class B and
Class C shares."
Waivers of Class B Sales Charges. The Class B contingent
deferred sales charge will not apply to shares purchased in certain
types of transactions, nor will it apply to shares redeemed in
certain circumstances, as described below under "Waivers of Class
B and Class C Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset value
per share without an initial sales charge. However, if Class C
shares are redeemed within 12 months of their purchase, a
contingent deferred sales charge of 1.0% will be deducted from the
redemption proceeds. That sales charge will not apply to shares
purchased by the reinvestment of dividends or capital gains
distributions. The contingent deferred sales charge will be based
on the lesser of the net asset value of the redeemed shares at the
time of redemption or the original offering price (which is the
original net asset value). The contingent deferred sales charge is
not imposed on the amount of your account value represented by the
increase in net asset value over the initial purchase price. The
Class C contingent deferred sales charge is paid to the Distributor
to reimburse its expenses of providing distribution-related
services to the Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge
applies to a redemption, the Fund redeems shares in the following
order: (1) shares acquired by reinvestment of dividends and capital
gains distributions, (2) shares held for over 12 months, and (3)
shares held the longest during the 12-month period.
Distribution and Service Plans for Class B and Class C Shares.
The Fund has adopted Distribution and Service Plans for Class B and
Class C shares to compensate the Distributor, in the case of Class
B shares, and to reimburse the Distributor, in the case of Class C
shares, for distributing and servicing accounts. Under the Plans,
the Fund pays the Distributor an annual "asset-based sales charge"
of 0.75% per year on Class B shares that are outstanding for 6
years or less and on Class C shares. The Distributor also receives
a service fee of 0.25% per year under each plan.
Under each Plan, both fees are computed on the average of the
net asset value of shares in the respective class, determined as of
the close of each regular business day during the period. The
asset-based sales charge and service fees increase Class B and
Class C expenses by up to 1.00% of the net assets per year of the
respective class.
The Distributor uses the service fees to compensate dealers
for providing personal services for accounts that hold Class B or
Class C shares. Those services are similar to those provided under
the Class A Service Plan, described above. The Distributor pays
the 0.25% service fees to dealers in advance for the first year
after Class B or Class C shares have been sold by the dealer and
retains the service fee paid by the Fund in that year. After the
shares have been held for a year, the Distributor pays the service
fees to dealers on a quarterly basis.
The asset-based sales charge allows investors to buy Class B
or Class C shares without a front-end sales charge while allowing
the Distributor to compensate dealers that sell those shares. The
Fund pays the asset-based sales charges to the Distributor for its
services rendered in distributing Class B and Class C shares.
Those payments are at a fixed rate that is not related to the
Distributor's expenses. The services rendered by the Distributor
include paying and financing the payment of sales commissions,
service fees and other costs of distributing and selling Class B
and Class C shares.
The Distributor currently pays sales commissions of 3.75% of
the purchase price of Class B shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sales of Class B shares is therefore 4.00% of the
purchase price. The Distributor retains the Class B asset-based
sales charge. If a dealer has a special agreement with the
Distributor the Distributor will pay the Class B service fee and
the asset-based sales charge to the dealer quarterly in lieu of
paying the sales commission and service for advance at the time of
purchase.
The Distributor currently pays sales commissions of 0.75% of
the purchase price of Class C shares to dealers from its own
resources at the time of sale. Including the advance of the
service fee, the total amount paid by the Distributor to the dealer
at the time of sales of Class C shares is therefore 1.00% of the
purchase price. The Distributor plans to pay the asset-based sales
charge as an ongoing commission to the dealer on Class C shares
that have been outstanding for a year or more. If a dealer has a
special agreement with the Distributor, the Distributor shall pay
the Class C service fee and asset-based sales charge to the dealer
quarterly in lieu of paying the sales commission and service fee
advance at the time of purchase.
The Distributor's actual expenses in selling Class B and Class
C shares may be more than the payments it receives from contingent
deferred sales charges collected on redeemed shares and from the
Fund under the Distribution and Service Plans for Class B and C
shares. Therefore, those expenses may be carried over and paid in
future years. At December 31, 1997, the end of the Class B Plan
year, the Distributor had incurred unreimbursed expenses in
connection with the sale of Class B shares of $_______ (equal to
____% of the Fund's net assets represented by Class B shares on
that date). At December 31, 1997, the end of the Class C Plan year,
the Distributor had incurred unreimbursed expenses under the Plan
of $_______ (equal to ____% of the Fund's net assets represented by
Class C shares on that date) which have been carried over into the
present plan year.
If either Plan is terminated by the Fund, the Board of
Trustees may allow the Fund to continue payments of the asset-based
sales charge to the Distributor for certain expenses it incurred
before the plan was terminated.
Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to
shares purchased in certain types of transactions nor will it apply
to Class B and Class C shares redeemed in certain circumstances as
described below. The reasons for this policy are in "Reduced Sales
Charges" in the Statement of Additional Information.
Waivers for Redemptions of Shares in Certain Cases. The Class
B and Class C contingent deferred sales charges will be waived for
redemptions of shares in the following cases if the Transfer Agent
is notified that these conditions apply to the redemption:
distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an
Automatic Withdrawal Plan after the participant reaches age 59-1/2,
as long as the payments are no more than 10% of the account value
annually (measured from the date the Transfer Agent receives the
request), or (b) following the death or disability (as defined in
the Internal Revenue Code) of the participant or beneficiary (the
death or disability must have occurred after the account was
established);
redemptions from accounts other than Retirement Plans
following the death or disability of the last surviving shareholder
including a trustee of a "grantor" trust or revocable living trust
for which the trustee is also the sole beneficiary (the death or
disability must have occurred after the account was established and
for disability you must provide evidence of a determination of
disability by the Social Security Administration);
returns of excess contributions to Retirement Plans;
distributions from retirement plans to make "substantially
equal periodic payments" as permitted in Section 72(t) of the
Internal Revenue Code that do not exceed 10% of the account value
annually, measured from the date the Transfer Agent receives the
request;
shares redeemed involuntarily, as described in "Shareholder
Account Rules and Policies" below;
distributions from OppenheimerFunds prototype 401(k) plans
(1) for hardship withdrawals; (2) under a Qualified Domestic
Relations Order, as defined in the Internal Revenue Code; (3) to
meet minimum distribution requirements as defined in the Internal
Revenue Code; (4) to make "substantially equal periodic payments"
as described in Section 72(t) of the Internal Revenue Code; or (5)
for separation from service; (6) for loans to participants or
beneficiaries;
distributions from 401(k) plans sponsored by broker-dealers
that have entered into a special agreement with the Distributor
allowing this waiver.
Waivers for Shares Sold or Issued in Certain Transactions.
The contingent deferred sales charge is also waived on Class B and
Class C shares sold or issued in the following cases:
shares sold to the Manager or its affiliates;
shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with
the Manager or the Distributor for that purpose;
shares issued in plans of reorganization to which the Fund
is a party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund
account to your account at your bank or other financial institution
to enable you to send money electronically between those accounts
to perform a number of types of account transactions. These
include purchases of shares by telephone (either through a service
representative or by PhoneLink, described below), automatic
investments under Asset Builder Plans, and sending dividends and
distributions or Automatic Withdrawal Plan payments directly to
your bank account. Please call the Transfer Agent for more
information.
AccountLink privileges should be requested on your dealer's
settlement instructions if you buy your shares through your dealer.
After your account is established, you can request AccountLink
privileges by sending signature-guaranteed instructions to the
Transfer Agent. AccountLink privileges will apply to each
shareholder listed in the registration on your account as well as
to your dealer representative of record unless and until the
Transfer Agent receives written instructions terminating or
changing those privileges. After you establish AccountLink for your
account, any change of bank account information must be made by
signature-guaranteed instructions to the Transfer Agent signed by
all shareholders who own the account.
Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase
shares in amounts up to $250,000 through a telephone
representative, call the Distributor at 1-800-852-8457. The
purchase payment will be debited from your bank account.
PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of
account transactions automatically using a touch-tone phone.
PhoneLink may be used on already-established Fund accounts after
you obtain a Personal Identification Number (PIN), by calling the
special PhoneLink number: 1-800-533-3310.
Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have
established AccountLink privileges to link your bank account with
the Fund, to pay for these purchases.
Exchanging Shares. With the OppenheimerFunds Exchange
Privilege, described below, you can exchange shares automatically
by phone from your Fund account to another Oppenheimer funds
account you have already established by calling the special
PhoneLink number. Please refer to "How to Exchange Shares," below,
for details.
Selling Shares. You can redeem shares by telephone
automatically by calling the PhoneLink number and the Fund will
send the proceeds directly to your AccountLink bank account.
Please refer to "How to Sell Shares," below, for details.
Shareholder Transactions by Fax. Requests for certain account
transactions may be sent to the Transfer Agent by fax (telecopier).
Please call 1-800-525-7048 for information about which transactions
are included. Transaction requests submitted by fax are subject to
the same rules and restrictions as written and telephone requests
described in this Prospectus.
Automatic Withdrawal and Exchange Plans. The Fund has several
plans that enable you to sell shares automatically or exchange them
to another Oppenheimer funds account on a regular basis:
Automatic Withdrawal Plans. If your Fund account is $5,000
or more, you can establish an Automatic Withdrawal Plan to receive
payments of at least $50 on a monthly, quarterly, semi-annual or
annual basis. The checks may be sent to you or sent automatically
to your bank account on AccountLink. You may even set up certain
types of withdrawals of up to $1,500 per month by telephone. You
should consult the Statement of Additional Information for more
details.
Automatic Exchange Plans. You can authorize the Transfer
Agent to automatically exchange an amount you establish in advance
for shares of up to five other Oppenheimer funds on a monthly,
quarterly, semi-annual or annual basis under an Automatic Exchange
Plan. The minimum purchase for each Oppenheimer fund account is
$25. These exchanges are subject to the terms of the Exchange
Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A
or Class B shares of the Fund, you have up to 6 months to reinvest
all or part of the redemption proceeds in Class A shares of the
Fund or other Oppenheimer funds without paying a sales charge.
This privilege applies to Class A shares that you purchased subject
to an initial sales charge and to Class A or Class B shares on
which you paid a contingent deferred sales charge when you redeemed
them. This privilege does not apply to Class C shares. You must
be sure to ask the Distributor for this privilege when you send
your payment. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for
your retirement plans. If you participate in a plan sponsored by
your employer, the plan trustee or administrator must make the
purchase of shares for your retirement plan account. The
Distributor offers a number of different retirement plans that can
be used by individuals and employers:
Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
403(b)(7) Custodial Plans for employees of eligible tax-
exempt organizations, such as schools, hospitals and charitable
organizations
SEP-IRAs (Simplified Employee Pension Plans) for small
business owners or people with income from self-employment;
including SAR/SEP-IRAs
Pension and Profit-Sharing Plans for self-employed persons
and other employers
401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan
documents, which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day.
Your shares will be sold at the net asset value next calculated
after your order is received and accepted by the Transfer Agent.
The Fund offers you a number of ways to sell your shares: in
writing or by telephone. You can also set up Automatic Withdrawal
Plans to redeem shares on a regular basis, as described above. If
you have questions about any of these procedures, and especially if
you are redeeming shares in a special situation, such as due to the
death of the owner, or from a retirement plan, please call the
Transfer Agent first, at 1-800-525-7048, for assistance.
Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must
submit a withholding form with your request to avoid delay. If your
retirement plan account is held for you by your employer, you must
arrange for the distribution request to be sent by the plan
administrator or trustee. There are additional details in the
Statement of Additional Information.
Certain Requests Require a Signature Guarantee. To protect
you and the Fund from fraud, certain redemption requests must be in
writing and must include a signature guarantee in the following
situations (there may be other situations also requiring a
signature guarantee):
You wish to redeem more than $50,000 worth of shares and
receive a check
The redemption check is not payable to all shareholders
listed on the account statement
The redemption check is not sent to the address of record on
your account statement
Shares are being transferred to a Fund account with a
different owner or name
Shares are redeemed by someone other than the owners (such
as an Executor)
Where Can I Have My Signature Guaranteed? The Transfer
Agent will accept a guarantee of your signature by a number of
financial institutions, including: a U.S. bank, trust company,
credit union or savings association, or by a foreign bank that has
a U.S. correspondent bank, or by a U.S. registered dealer or broker
in securities, municipal securities or government securities, or by
a U.S. national securities exchange, a registered securities
association or a clearing agency. If you are signing as a
fiduciary or on behalf of a corporation, partnership or other
business, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that
includes:
Your name
The Fund's name
Your Fund account number (from your account statement)
The dollar amount or number of shares to be redeemed
Any special payment instructions
Any share certificates for the shares you are selling,
The signatures of all registered owners exactly as the
account is registered, and
Any special requirements or documents requested by the
Transfer Agent to assure proper authorization of the person asking
to sell shares.
Use the following address for requests by mail:
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
Send courier or Express Mail requests to:
OppenheimerFunds Services
10200 E. Girard Avenue, Building D
Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of
record may also sell your shares by telephone. To receive the
redemption price on a regular business day, your call must be
received by the Transfer Agent by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. You may not redeem shares held in an OppenheimerFunds
retirement plan or under a share certificate by telephone.
To redeem shares through a service representative, call 1-
800-852-8457
To redeem shares automatically on PhoneLink, call 1-800-533-
3310
Whichever method you use, you may have a check sent to the
address on the account statement, or, if you have linked your Fund
account to your bank account on AccountLink, you may have the
proceeds wired to that bank account.
Telephone Redemptions Paid by Check. Up to $50,000 may be
redeemed by telephone in any 7-day period. The check must be
payable to all owners of record of the shares and must be sent to
the address on the account statement. This service is not
available within 30 days of changing the address on an account.
Telephone Redemptions Through AccountLink or Wire. There
are no dollar limits on telephone redemption proceeds sent to a
bank account designated when you establish AccountLink. Normally
the ACH transfer to your bank is initiated on the business day
after the redemption. You do not receive dividends on the proceeds
of the shares you redeemed while they are waiting to be
transferred.
Shareholders may also have the Transfer Agent send redemption
proceeds of $2,500 or more by Federal Funds wire to a designated
commercial bank account if the bank is a member of the Federal
Reserve wire system. There is a $10 fee for each Federal Funds
wire. To place a wire redemption request, call the Transfer Agent
at 1-800-852-8457. The wire will normally be transmitted on the
next bank business day after the shares are redeemed. There is a
possibility that the wire may be delayed up to seven days to enable
the Fund to sell securities to pay the redemption proceeds. No
dividends are accrued or paid on the proceeds of shares that have
been redeemed and are awaiting transmittal by wire. To establish
wire redemption privileges on an account that is already
established, please contact the Transfer Agent for instructions.
Selling Shares Through Your Dealer. The Distributor has made
arrangements to repurchase Fund shares from dealers and brokers on
behalf of their customers. Please call your dealer for more
information about this procedure. Brokers or dealers may charge
for that service. Please refer to "Special Arrangements for
Repurchase of Shares from Dealers and Brokers" in the Statement of
Additional Information for more details.
How to Exchange Shares
Shares of the Fund may be exchanged for shares of certain
Oppenheimer funds at net asset value per share at the time of
exchange, without sales charge. To exchange shares, you must meet
several conditions:
Shares of the fund selected for exchange must be available
for sale in your state of residence
The prospectuses of this Fund and the fund whose shares you
want to buy must offer the exchange privilege
You must hold the shares you buy when you establish your
account for at least 7 days before you can exchange them; after the
account is open 7 days, you can exchange shares every regular
business day
You must meet the minimum purchase requirements for the fund
you purchase by exchange
Before exchanging into a fund, you should obtain and read
its prospectus
Shares of a particular class of the Fund may be exchanged only
for shares of the same class in the other Oppenheimer funds. For
example, you can exchange Class A shares of this Fund only for
Class A shares of another fund. At present, Oppenheimer Money
Market Fund, Inc., offers only one class of shares, which are
considered to be Class A shares for this purpose. In some cases,
sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
Written Exchange Requests. Submit an OppenheimerFunds
Exchange Request form, signed by all owners of the account. Send
it to the Transfer Agent at the addresses listed in "How to Sell
Shares."
Telephone Exchange Requests. Telephone exchange requests may
be made either by calling a service representative at 1-800-852-
8457 or by using PhoneLink for automated exchanges, by calling 1-
800-533-3310. Telephone exchanges may be made only between accounts
that are registered with the same name(s) and address. Shares held
under certificates may not be exchanged by telephone.
You can find a list of Oppenheimer funds currently available
for exchanges in the Statement of Additional Information or obtain
one by calling a service representative at 1-800-525-7048. That
list can change from time to time.
There are certain exchange policies you should be aware of:
Shares are normally redeemed from one fund and purchased
from the other fund in the exchange transaction on the same regular
business day on which the Transfer Agent receives an exchange
request that is in proper form by the close of The New York Stock
Exchange that day, which is normally 4:00 P.M., but may be earlier
on some days. However, either fund may delay the purchase of
shares of the fund you are exchanging into up to 7 days if it
determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple
exchange requests from a dealer in a "market-timing" strategy might
require the sale of portfolio securities at a time or price
disadvantageous to the Fund.
Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange
request that will disadvantage it, or to refuse multiple exchange
requests submitted by a shareholder or dealer.
The Fund may amend, suspend or terminate the exchange
privilege at any time. Although the Fund will attempt to provide
you notice whenever it is reasonably able to do so, it may impose
these changes at any time.
For tax purposes, exchanges of shares involve a redemption
of the shares of the Fund you own and a purchase of the shares of
the other fund, which may result in a capital gain or loss. For
more information about taxes affecting exchanges, please refer to
"How to Exchange Shares" in the Statement of Additional
Information.
If the Transfer Agent cannot exchange all the shares you
request because of a restriction cited above, only the shares
eligible for exchange will be exchanged.
The Distributor has entered into agreements with certain
dealers and investment advisers permitting them to exchange their
clients' shares by telephone. These privileges are limited under
those agreements and the Distributor has the right to reject or
suspend those privileges. As a result, those exchanges may be
subject to notice requirements, delays and other limitations that
do not apply to shareholders who exchange their shares directly by
calling or writing to the Transfer Agent.
Shareholder Account Rules and Policies
Net Asset Value Per Share is determined for each class of
shares as of the close of The New York Stock Exchange, which is
normally 4:00 P.M. but may be earlier on some days, on each day the
Exchange is open by dividing the value of the Fund's net assets
attributable to a class by the number of shares of that class that
are outstanding. The Fund's Board of Trustees has established
procedures to value the Fund's securities to determine net asset
value. In general, securities values are based on market value.
There are special procedures for valuing illiquid and restricted
securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely
in the Statement of Additional Information.
The offering of shares may be suspended during any period in
which the determination of net asset value is suspended, and the
offering may be suspended by the Board of Trustees at any time the
Board believes it is in the Fund's best interest to do so.
Telephone Transaction Privileges for purchases, redemptions
or exchanges may be modified, suspended or terminated by the Fund
at any time. If an account has more than one owner, the Fund and
the Transfer Agent may rely on the instructions of any one owner.
Telephone exchange and redemption privileges automatically apply to
each owner of the account and the dealer representative of record
for the account unless refused on the new account Application or,
if not refused, will apply until the Transfer Agent receives
cancellation instructions from an owner of the account.
The Transfer Agent will record any telephone calls to verify
data concerning transactions and has adopted other procedures to
confirm that telephone instructions are genuine, by requiring
callers to provide tax identification numbers and other account
data or by using PINs, and by confirming such transactions in
writing. If the Transfer Agent does not use reasonable procedures
it may be liable for losses due to unauthorized transactions, but
otherwise neither the Transfer Agent nor the Fund will be liable
for losses or expenses arising out of telephone instructions
reasonably believed to be genuine. If you are unable to reach the
Transfer Agent during periods of unusual market activity, you may
not be able to complete a telephone transaction and should consider
placing your order by mail.
Redemption or transfer requests will not be honored until
the Transfer Agent receives all required documents in proper form.
From time to time, the Transfer Agent in its discretion may waive
certain of the requirements for redemptions stated in this
Prospectus.
Dealers that can perform account transactions for their
clients by participating in NETWORKING through the National
Securities Clearing Corporation are responsible for obtaining their
clients' permission to perform those transactions and are
responsible to their clients who are shareholders of the Fund if
the dealer performs any transaction erroneously or improperly.
The redemption price for shares will vary from day to day
because the values of the securities in the Fund's portfolio
fluctuate, and the redemption price, which is the net asset value
per share, will normally be different for Class A, Class B and
Class C shares. Therefore, the redemption value of your shares may
be more or less than their original cost.
Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the
shareholder under the redemption procedures described above) within
7 days after the Transfer Agent receives redemption instructions in
proper form, except under unusual circumstances determined by the
Securities and Exchange Commission delaying or suspending such
payments. For accounts registered in the name of a broker-dealer,
payment will be forwarded within 3 business days. The Transfer
Agent may delay forwarding a check or processing a payment via
AccountLink for recently purchased shares, but only until the
purchase payment has cleared. That delay may be as much as 10 days
from the date the shares were purchased. That delay may be avoided
if you purchase shares by certified check or arrange with your bank
to provide telephone or written assurance to the Transfer Agent
that your purchase payment has cleared.
Involuntary redemptions of small accounts may be made by the
Fund if the account value has fallen below $200 for reasons other
than the fact that the market value of shares has dropped, and in
some cases involuntary redemptions may be made to repay the
Distributor for losses from the cancellation of share purchase
orders.
Under unusual circumstances, shares of the Fund may be
redeemed "in kind", which means that the redemption proceeds will
be paid with securities from the Fund's portfolio. Please refer to
"How to Sell Shares" in the Statement of Additional Information for
more details.
"Backup Withholding" of Federal income tax may be applied at
the rate of 31% from taxable dividends, distributions and
redemption proceeds (including exchanges) if you fail to furnish
the Fund a certified Social Security or Employer Identification
Number when you sign your application, or if you violate Internal
Revenue Service regulations on tax reporting of income.
The Fund does not charge a redemption fee, but if your
dealer or broker handles your redemption, they may charge a fee.
That fee can be avoided by redeeming your Fund shares directly
through the Transfer Agent. Under the circumstances described in
"How to Buy Shares," you may be subject to a contingent deferred
sales charges when redeeming certain Class A, Class B and Class C
shares.
To avoid sending duplicate copies of materials to
households, the Fund will mail only one copy of each annual and
semi-annual report to shareholders having the same last name and
address on the Fund's records. However, each shareholder may call
the Transfer Agent at 1-800-525-7048 to ask that copies of those
materials be sent personally to that shareholder.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A,
Class B, Class C and Class Y shares from net investment income, if
any, on an annual basis and normally pays those dividends to
shareholders in December, but the Board of Trustees can change that
date. The Board may also cause the Fund to declare dividends after
the close of the Fund's fiscal year (which ends August 31st).
Because the Fund does not have an objective of seeking current
income, the amounts of dividends it pays, if any, will likely be
small. Also, dividends paid on Class A and Class Y, shares will
generally be higher than for Class B and Class C shares because
expenses allocable to Class B and Class C shares will generally be
higher.
Capital Gains. The Fund may make distributions annually in December
out of any net short-term or long-term capital gains, and the Fund
may make supplemental distributions of dividends and capital gains
following the end of its fiscal year. Long-term capital gains will
be separately identified in the tax information the Fund sends you
after the end of the year. Short-term capital gains are treated as
dividends for tax purposes. There can be no assurance that the
Fund will pay any capital gains distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are
reinvested. For other accounts, you have four options:
Reinvest All Distributions in the Fund. You can elect to
reinvest all dividends and long-term capital gains distributions in
additional shares of the Fund.
Reinvest Long-Term Capital Gains Only. You can elect to
reinvest long-term capital gains in the Fund while receiving
dividends by check or sent to your bank account on AccountLink.
Receive All Distributions in Cash. You can elect to receive
a check for all dividends and long-term capital gains distributions
or have them sent to your bank on AccountLink.
Reinvest Your Distributions in Another Oppenheimer Fund
Account. You can reinvest all distributions in another Oppenheimer
fund account you have established.
Taxes. If your account is not a tax-deferred retirement account,
you should be aware of the following tax implications of investing
in the Fund. Long-term capital gains are taxable as long-term
capital gains when distributed to shareholders. It does not matter
how long you held your shares. Dividends paid from short-term
capital gains and net investment income are taxable as ordinary
income. Distributions are subject to federal income tax and may be
subject to state or local taxes. Your distributions are taxable
when paid, whether you reinvest them in additional shares or take
them in cash. Every year the Fund will send you and the IRS a
statement showing the amount of each taxable distribution you
received in the previous year.
"Buying a Dividend": When a fund goes ex-dividend, its share
price is reduced by the amount of the distribution. If you buy
shares on or just before the ex-dividend date, or just before the
Fund declares a capital gains distribution, you will pay the full
price for the shares and then receive a portion of the price back
as a taxable dividend or capital gain.
Taxes on Transactions: Share redemptions, including
redemptions for exchanges, are subject to capital gains tax.
Generally speaking a capital gain or loss is the difference between
the price you paid for the shares and the price you received when
you sold them.
Returns of Capital: In certain cases distributions made by
the Fund may be considered a non-taxable return of capital to
shareholders. If that occurs, it will be identified in notices to
shareholders. A non-taxable return of capital may reduce your tax
basis in your Fund shares.
This information is only a summary of certain Federal tax
information about your investment. More information is contained
in the Statement of Additional Information, and in addition you
should consult with your tax adviser about the effect of an
investment in the Fund on your particular tax situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of the Fund
Who Were Shareholders of the Former Quest for Value Funds
The initial and contingent deferred sales charge rates and waivers
for Class A, Class B and Class C shares of the Fund described
elsewhere in this Prospectus are modified as described below for
those shareholders of (i) Quest for Value Fund, Inc., Quest for
Value Growth and Income Fund, Quest for Value Opportunity Fund,
Quest for Value Small Capitalization Fund and Quest for Value
Global Equity Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those
funds, and (ii) Quest for Value U.S. Government Income Fund, Quest
for Value Investment Quality Income Fund, Quest for Value Global
Income Fund, Quest for Value New York Tax-Exempt Fund, Quest for
Value National Tax-Exempt Fund and Quest for Value California Tax-
Exempt Fund when those funds merged into various Oppenheimer funds
on November 24, 1995. The funds listed above are referred to in
this Prospectus as the "Former Quest for Value Funds." The waivers
of initial and contingent deferred sales charges described in this
Appendix apply to shares of the Fund (i) acquired by such
shareholder pursuant to an exchange of shares of one of the
Oppenheimer funds that was one of the Former Quest for Value Funds
or (ii) received by such shareholder pursuant to the merger of any
of the Former Quest for Value Funds into an Oppenheimer fund on
November 24, 1995.
Class A Sales Charges
Reduced Class A Initial Sales Charge Rates for Certain Former
Quest Shareholders
Purchases by Groups, Associations and Certain Qualified
Retirement Plans. The following table sets forth the initial sales
charge rates for Class A shares purchased by a "Qualified
Retirement Plan" through a single broker, dealer or financial
institution, or by members of "Associations" formed for any purpose
other than the purchase of securities if that Qualified Retirement
Plan or that Association purchased shares of any of the Former
Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this
purpose only, a "Qualified Retirement Plan" includes any 401(k)
plan, 403(b) plan, and SEP/IRA or IRA plan for employees of a
single employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations
having 50 or more eligible employees or members, there is no
initial sales charge on purchases of Class A shares, but those
shares are subject to the Class A contingent deferred sales charge
described on pages __ to __ of this Prospectus.
Purchases made under this arrangement qualify for the lower of
the sales charge rate in the table based on the number of eligible
employees in a Qualified Retirement Plan or members of an
Association or the sales charge rate that applies under the Rights
of Accumulation described above in the Prospectus. In addition,
purchases by 401(k) plans that are Qualified Retirement Plans
qualify for the waiver of the Class A initial sales charge if they
qualified to purchase shares of any of the Former Quest For Value
Funds by virtue of projected contributions or investments of $1
million or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of
Associations, or as eligible employees in Qualified Retirement
Plans also may purchase shares for their individual or custodial
accounts at these reduced sales charge rates, upon request to the
Fund's Distributor.
Special Class A Contingent Deferred Sales Charge Rates. Class A
shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of
Former Quest for Value Funds into those Oppenheimer funds, and
which shares were subject to a Class A contingent deferred sales
charge prior to November 24, 1995, will be subject to a contingent
deferred sales charge at the following rates: if they are redeemed
within 18 months of the end of the calendar month in which they
were purchased, at a rate equal to 1.0% if the redemption occurs
within 12 months of their initial purchase and at a rate of 0.50 of
1.0% if the redemption occurs in the subsequent six months. Class
A shares of any of the Former Quest for Value Funds purchased
without an initial sales charge on or before November 22, 1995 will
continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
Waiver of Class A Sales Charges for Certain Shareholders. Class
A shares of the Fund purchased by the following investors are not
subject to any Class A initial or contingent deferred sales
charges:
Shareholders of the Fund who were shareholders of the AMA
Family of Funds on February 28, 1991 and who acquired shares of any
of the Former Quest for Value Funds by merger of a portfolio of the
AMA Family of Funds.
Shareholders of the Fund who acquired shares of any Former
Quest for Value Fund by merger of any of the portfolios of the
Unified Funds.
Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions. The Class A contingent deferred sales charge will
not apply to redemptions of Class A shares of the Fund purchased by
the following investors who were shareholders of any Former Quest
for Value Fund:
Investors who purchased Class A shares from a dealer that is
not or was not permitted to receive a sales load or redemption fee
imposed on a shareholder with whom that dealer has a fiduciary
relationship under the Employee Retirement Income Security Act of
1974 and regulations adopted under that law.
Participants in Qualified Retirement Plans that purchased
shares of any of the Former Quest for Value Funds pursuant to a
special "strategic alliance" with the distributor of those funds.
The Fund's Distributor will pay a commission to the dealer for
purchases of Fund shares as described above in "Class A Contingent
Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
Waivers for Redemptions of Shares Purchased Prior to March 6,
1995. In the following cases, the contingent deferred sales charge
will be waived for redemptions of Class A, Class B or Class C
shares of the Fund acquired by merger of a Former Quest for Value
Fund into the Fund or by exchange from an Oppenheimer fund that was
a Former Quest for Value Fund or into which such fund merged, if
those shares were purchased prior to March 6, 1995: in connection
with (i) distributions to participants or beneficiaries of plans
qualified under Section 401(a) of the Internal Revenue Code or from
custodial accounts under Section 403(b)(7) of the Code, Individual
Retirement Accounts, deferred compensation plans under Section 457
of the Code, and other employee benefit plans, and returns of
excess contributions made to each type of plan, (ii) withdrawals
under an automatic withdrawal plan holding only either Class B or
Class C shares if the annual withdrawal does not exceed 10% of the
initial value of the account, and (iii) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum value of such
accounts.
Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995. In the following cases, the
contingent deferred sales charge will be waived for redemptions of
Class A, Class B or Class C shares of the Fund acquired by merger
of a Former Quest for Value Fund into the Fund or by exchange from
an Oppenheimer fund that was a Former Quest For Value Fund or into
which such fund merged, if those shares were purchased on or after
March 6, 1995, but prior to November 24, 1995: (1) distributions
to participants or beneficiaries from Individual Retirement
Accounts under Section 408(a) of the Internal Revenue Code or
retirement plans under Section 401(a), 401(k), 403(b) and 457 of
the Code, if those distributions are made either (a) to an
individual participant as a result of separation from service or
(b) following the death or disability (as defined in the Code) of
the participant or beneficiary; (2) returns of excess contributions
to such retirement plans; (3) redemptions other than from
retirement plans following the death or disability of the
shareholder(s) (as evidenced by a determination of total disability
by the U.S. Social Security Administration); (4) withdrawals under
an automatic withdrawal plan (but only for Class B or Class C
shares) where the annual withdrawals do not exceed 10% of the
initial value of the account; and (5) liquidation of a
shareholder's account if the aggregate net asset value of shares
held in the account is less than the required minimum account
value. A shareholder's account will be credited with the amount of
any contingent deferred sales charge paid on the redemption of any
Class A, Class B or Class C shares of the Fund described in this
section if within 90 days after that redemption, the proceeds are
invested in the same Class of shares in this Fund or another
Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the
TRAC-2000 recordkeeping system and that were transferred to an
OppenheimerFunds prototype 401(k) plan shall be eligible for an
additional one-time payment by the Distributor of 1% of the value
of the plan assets transferred, but that payment may not exceed
$5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value
Fund to Quest for Value prototype 401(k) plans that were maintained
on the TRAC-2000 recordkeeping system and (I) the shares held by
those plans were exchanged for Class A shares, or (ii) the plan
assets were transferred to an OppenheimerFunds prototype 401(k)
plan, shall be eligible for an additional one-time payment by the
Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000.
<PAGE>
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER CAPITAL APPRECIATION FUND
(formerly named "Oppenheimer Target Fund")
Graphic material included in Prospectus of Oppenheimer Capital
Appreciation Fund: "Comparison of Total Return of Oppenheimer
Target Fund with the S&P 500 Index - Change in Value of a $10,000
Hypothetical Investment"
Linear graphs will be included in the Prospectus of
Oppenheimer Capital Appreciation Fund (the "Fund") depicting the
initial account value and subsequent account value of a
hypothetical $10,000 investment in each class of shares of the
Fund. For Class A shares, that graph will cover each of the Fund's
last ten fiscal years from 12/31/86 through 8/31/97; in the case of
the Fund's Class B shares, the graph will cover the period from the
inception of the Class (November 1, 1995) through 8/31/97; and in
the case of the Fund's Class C shares, the graph will cover the
period from the inception of the class (December 1, 1993) through
8/31/97. Class Y shares were not available during the last fiscal
year and, accordingly, are not set forth below.
The graphs assume that all dividends and capital gains were
reinvested in additional shares. In each graph, the respective
class of shares will be compared over the same time period with the
same investment in the S&P 500 Index. Set forth below are the
relevant data points that will appear on the linear graphs.
Additional information with respect to the foregoing, including a
description of the S&P 500 Index, is set forth in the Prospectus
under "Performance of the Fund - Comparing the Fund's Performance
to the Market."
Fiscal Year Oppenheimer S&P 500
(Period) Ended Target Fund A Index
12/31/86 $10,205 $11,854
12/31/87 $ 8,374 $12,526
12/31/88 $11,086 $14,573
12/31/89 $13,115 $19,122
12/31/90 $12,835 $18,524
12/31/91 $18,141 $24,081
12/31/92 $20,003 $25,872
12/31/93 $20,788 $28,439
12/31/94 $20,882 $28,804
12/31/95 $28,161 $39,495
8/31/96 $31,619 $42,933
8/31/97 $ $
Fiscal Oppenheimer S&P 500
Period Ended Target Fund B Index
11/01/95(1) $10,000 $10,000
12/31/95 $10,167 $10,640
8/31/96 $10,852 $11,432
8/31/97 $ $
Fiscal Oppenheimer S&P 500
Period Ended Target Fund C Index
11/30/93(2) $10,000 $10,000
12/31/93 $10,117 $10,121
12/31/94 $10,066 $10,254
12/31/95 $13,443 $14,103
8/31/96 $15,010 $15,154
8/31/97 $ $
- ------------------
(1)Class B shares of the Fund were first publicly offered on
November 1, 1995.
(2)Class C shares of the Fund were first publicly offered on
December 1, 1993.
<PAGE>
Oppenheimer Capital Appreciation Fund
Two World Trade Center
New York, New York 10048-0203
1-800-525-7048
Investment Advisor
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been
authorized to give any information or to make any representations
other than those contained in this Prospectus or the Statement of
Additional Information and, if given or made, such information and
representations must not be relied upon as having been authorized
by the Fund, OppenheimerFunds, Inc.; OppenheimerFunds Distributor,
Inc., or any affiliate thereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy
any of the securities offered hereby in any state to any person to
whom it is unlawful to make such an offer in such state.
PR0320.001.1197 Printed on Recycled Paper
<PAGE>
Oppenheimer Capital Appreciation Fund
(formerly named "Oppenheimer Target Fund")
Two World Trade Center, New York, New York 10048-0203
1-800-525-7048
Statement of Additional Information dated November 1, 1997
This Statement of Additional Information of Oppenheimer
Capital Appreciation Fund is not a Prospectus. This document
contains additional information about the Fund and supplements
information in the Prospectus dated November 1, 1997. It should be
read together with the Prospectus, which may be obtained by writing
to the Fund's Transfer Agent, OppenheimerFunds Services, at P.O.
Box 5270, Denver, Colorado 80217 or by calling the Transfer Agent
at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies. . . . . . . . . . . . .
Investment Policies and Strategies. . . . . . . . . .
Other Investment Techniques and Strategies. . . . . .
Other Investment Restrictions . . . . . . . . . . . .
How the Fund is Managed . . . . . . . . . . . . . . . . .
Organization and History. . . . . . . . . . . . . . .
Trustees and Officers of the Fund . . . . . . . . . .
The Manager and Its Affiliates. . . . . . . . . . . .
Brokerage Policies of the Fund . . . . . . . . . . . . . .
Performance of the Fund. . . . . . . . . . . . . . . . . .
Distribution and Service Plans . . . . . . . . . . . . . .
About Your Account
How to Buy Shares. . . . . . . . . . . . . . . . . . . . .
How to Sell Shares . . . . . . . . . . . . . . . . . . . .
How to Exchange Shares . . . . . . . . . . . . . . . . . .
Dividends, Capital Gains and Taxes . . . . . . . . . . . .
Additional Information About the Fund. . . . . . . . . . .
Financial Information About the Fund
Independent Auditors' Report . . . . . . . . . . . . . . .
Financial Statements . . . . . . . . . . . . . . . . . . .
Appendix A: Industry Classifications . . . . . . . . . . . A-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth
below is supplemental information about those policies and the
types of securities in which the Fund invests, as well as the
strategies the Fund may use to try to achieve its objective.
Capitalized terms used in this Statement of Additional Information
have the same meaning as those terms have in the Prospectus.
In selecting securities for the Fund's portfolio, the Fund's
investment advisor, OppenheimerFunds, Inc. (the "Manager"),
evaluates the merits of securities primarily through the exercise
of its own investment analysis. This may include, among other
things, evaluation of the history of the issuer's operations,
prospects for the industry of which the issuer is part, the
issuer's financial condition, the issuer's pending product
developments and developments by competitors, the effect of general
market and economic conditions on the issuer's business, and
legislative proposals or new laws that might affect the issuer.
Current income is not a consideration in the selection of portfolio
securities for the Fund, whether for appreciation, defensive or
liquidity purposes. The fact that a security has a low yield or
does not pay current income will not be an adverse factor in
selecting securities to try to achieve the Fund's investment
objective of capital appreciation unless the Manager believes that
the lack of yield might adversely affect appreciation
possibilities.
The portion of the Fund's assets allocated to securities and
methods selected for capital appreciation will depend upon the
judgment of the Manager as to the future movement of the equity
securities markets. For example, when the economy is expanding,
companies in the consumer durable and technology sectors may be in
a position to benefit from changes in the business cycle and may
present long-term growth opportunities. If the Manager believes
that a market decline is likely, defensive securities and
investment methods will be emphasized (See "Temporary Defensive
Investments," below).
Growth-Type Companies. The "growth-type" companies whose
securities may be emphasized in the Fund's portfolio include, among
others, companies in the natural resources fields or those
developing commercial applications for new scientific knowledge
having potential for technological innovation, such as computer
software, telecommunications equipment and services, and new
consumer products.
The Fund may invest in securities of smaller, less well-known
companies (see "Investing in Small, Unseasoned Companies" below),
but the Fund may also buy securities of large, well-known companies
(which are not generally considered to be "growth-type" companies)
when the Manager believes that the amounts of securities of smaller
companies available at prices that may be expected to appreciate
are insufficient to help the Fund achieve its objective of capital
appreciation.
Warrants and Rights. Warrants are options to purchase
equity securities at set prices valid for a specified period of
time. The prices of warrants do not necessarily move in a manner
parallel to the prices of the underlying securities. The prices of
warrants do not necessarily move parallel to the prices of the
underlying securities. The price the Fund pays for a warrant will
be lost unless the warrant is exercised prior to its expiration.
Rights are similar to warrants, but normally have a short duration
and are distributed directly by the issuer to its shareholders.
Rights and warrants have no voting rights, receive no dividends and
have no rights with respect to the assets of the issuer.
Other Investment Techniques and Strategies
Hedging with Options and Futures Contracts. As described in
the Prospectus, the Fund may employ one or more types of Hedging
Instruments. Hedging Instruments may be used to attempt to: (1)
protect against possible declines in the market value of the Fund's
portfolio resulting from downward trends in the securities markets,
(2) protect unrealized gains in the value of the Fund's securities
which have appreciated, (3) facilitate selling securities for
investment reasons, (4) establish a position in the securities
markets as a temporary substitute for purchasing particular debt
securities, or (5) reduce the risk of adverse currency
fluctuations.
The Fund may use hedging to attempt to protect against
declines in the market value of the Fund's portfolio, or to permit
the Fund to retain unrealized gains in the value of portfolio
securities which have appreciated, or to facilitate selling
securities for investment reasons. To do, the Fund may: (1)
purchase Futures or (2) purchase calls on such Futures or
securities. Normally, the Fund would then purchase the equity
securities and terminate the hedging position. When hedging to
protect against declines in the dollar value of a foreign currency-
denominated security, the Fund may: (1) purchase puts on that
foreign currency or on foreign currency Futures, (2) write calls on
that currency or on such Futures, or (3) enter into Forward
Contracts at a lower rate than the spot ("cash") rate.
The Fund's strategy of hedging with Futures and options on
Futures will be incidental to the Fund's activities in the
underlying cash market. At present, the Fund does not intend to
enter into Futures, Forward Contracts and options on Futures if,
after any such purchase, the sum of margin deposits on Futures and
premiums paid on Futures options exceeds 5% of the value of the
Fund's total assets. In the future, the Fund may employ Hedging
Instruments and strategies that are not presently contemplated but
which may be developed, to the extent such investment methods are
consistent with the Fund's investment objective, legally
permissible and adequately disclosed. Additional Information about
the Hedging Instruments the Fund may use is provided below
Writing Covered Call Options. The Fund may write (that is,
sell) call options ("calls"). All calls written by the Fund must
be "covered" while the call is outstanding (that means, the Fund
must own the securities subject to the call or other securities
acceptable for applicable escrow requirements). Calls on Futures
(discussed below) must be covered by deliverable securities or by
liquid assets segregated to satisfy the Futures contract.
When the Fund writes a call on a security it receives a
premium and agrees to sell the callable investment to a purchaser
of a corresponding call during the call period (usually not more
than 9 months) at a fixed exercise price (which may differ from the
market price of the underlying investment), regardless of market
price changes during the call period. The Fund has retained the
risk of loss should the price of the underlying security decline
during the call period, which may be offset to some extent by the
premium.
To terminate its obligation on a call it has written, the Fund
may purchase a corresponding call in a "closing purchase
transaction." A profit or loss will be realized, depending upon
whether the net of the amount of the option transaction costs and
the premium received on the call the Fund has written is more or
less than the price of the call the Fund has subsequently
purchased. A profit may also be realized if the call lapses
unexercised, because the Fund retains the underlying investment and
the premium received. Those profits are considered short-term
capital gains for Federal income tax purposes, and when distributed
by the Fund are taxable as ordinary income. If the Fund could not
effect a closing purchase transaction due to lack of a market, it
would have to hold the callable investments until the call lapsed
or was exercised.
The Fund may also write calls on Futures without owning a
futures contract or deliverable securities, provided that at the
time the call is written, the Fund covers the call by identifying
to its custodian bank an equivalent dollar amount of deliverable
securities or liquid assets that are to be segregated. The Fund
will segregate additional liquid assets if the value of the
escrowed assets drops below 100% of the current value of the
Future. In no circumstances would an exercise notice require the
Fund to deliver a futures contract; it would simply put the Fund in
a short futures position, which is permitted by the Fund's hedging
policies.
Purchasing Calls and Puts. When the Fund purchases a call
(other than in a closing purchase transaction), it pays a premium
and, except as to calls on stock indices, has the right to buy the
underlying investment from a seller of a corresponding call on the
same investment during the call period at a fixed exercise price.
In purchasing a call, the Fund benefits only if the call is sold at
a profit or if, during the call period, the market price of the
underlying investment is above the sum of the exercise price, the
transaction costs and the premium paid and the call is exercised.
If the call is not exercised or sold (whether or not at a profit),
it will become worthless at its expiration date and the Fund will
lose its premium payment and the right to purchase the underlying
investment.
When the Fund purchases a put, it pays a premium and, except
as to puts on stock indices, has the right to sell the underlying
investment to a seller of a corresponding put on the same
investment during the put period at a fixed exercise price. Buying
a put on an investment the Fund owns (a "protective put") enables
the Fund to attempt to protect itself during the put period against
a decline in the value of the underlying investment below the
exercise price by selling the underlying investment at the exercise
price to a seller of a corresponding put. If the market price of
the underlying investment is equal to or above the exercise price
and as a result the put is not exercised or resold, the put will
become worthless at its expiration date, and the Fund will lose its
premium payment and the right to sell the underlying investment.
However, the put may be sold prior to expiration (whether or not at
a profit).
Buying a put on an investment it does not own, either a put on
an index or a put on a Stock Index Future not held by the Fund,
permits the Fund either to resell the put or buy the underlying
investment and sell it at the exercise price. The resale price of
the put will vary inversely with the price of the underlying
investment. If the market price of the underlying investment is
above the exercise price and as a result the put is not exercised,
the put will become worthless on its expiration date. In the event
of a decline in the stock market, the Fund could exercise or sell
the put at a profit to attempt to offset some or all of its loss on
its portfolio securities. When the Fund purchases a put on an
index, or on a Future not held by it, the put protects the Fund to
the extent that the index moves in a similar pattern to the
securities held. In the case of a put on an index or Future,
settlement is in cash rather than by delivery by the Fund of the
underlying investment.
Options on Indices and Futures. Puts and calls on broadly-
based stock indices or Stock Index Futures are similar to puts and
calls on securities or futures contracts except that all
settlements are in cash and gain or loss depends on changes in the
index in question (and thus on price movements in the stock market
generally) rather than on price movements in individual securities
or futures contracts. When the Fund buys a call on an index or
Future, it pays a premium. During the call period, upon exercise
of a call by the Fund, a seller of a corresponding call on the same
investment will pay the Fund an amount of cash to settle the call
if the closing level of the index or Future upon which the call is
based is greater than the exercise price of the call. That cash
payment is equal to the difference between the closing price of the
index and the exercise price of the call times a specified multiple
(the "multiplier") which determines the total dollar value for each
point of difference.
When the Fund buys a put on an index or Future, it pays a
premium and has the right during the put period to require a seller
of a corresponding put, upon the Fund's exercise of its put, to
deliver to the Fund an amount of cash to settle the put if the
closing level of the index or Future upon which the put is based is
less than the exercise price of the put. That cash payment is
determined by the multiplier, in the same manner as described above
as to calls.
Stock Index Futures. The Fund may buy and sell Stock Index
Futures. No monetary amount is paid or received upon the purchase
or sale of a Stock Index Future or a foreign currency exchange
contract ("Forward Contract"), discussed below. This is a type of
financial future for which the index used as the basis for trading
is a broadly-based stock index (including stocks that are not
limited to issuers in a particular industry or group of
industries). A stock index assigns relative values to the stocks
included in the index and fluctuates with the changes in the market
value of these stocks. Stock indices cannot be purchased or sold
directly. Financial Futures are contracts based on the future
value of the basket of securities that comprise the underlying
index. The contracts obligate the seller to deliver, and the
purchaser to take, cash to settle the futures transaction, or to
enter into an offsetting contract. No physical delivery of the
securities underlying the index is made on settling futures
obligations.
Upon entering into a Futures transaction, the Fund will be
required to deposit an initial margin payment in cash or U.S.
Treasury bills with the futures commission merchant (the "futures
broker"). The initial margin will be deposited with the Funds's
Custodian in an account registered in the futures broker's name;
however the futures broker can gain access to that account only
under specified conditions. As the future is marked to market
(that is, as the value on the Fund's books is changed) to reflect
changes in its market value, subsequent margin payments, called
variation margin, will be made to or by the futures broker on a
daily basis.
At any time prior to the expiration of the Future, the Fund
may elect to close out its position by taking an opposite position
at which time a final determination of variation margin is made and
additional cash is required to be paid by or released to the Fund.
Any loss or gain is then realized for tax purposes. Although Stock
Index Futures by their terms call for cash settlement or delivery
of cash, in most cases the obligation is fulfilled by entering into
an offsetting position. All futures transactions are effected
through a clearinghouse associated with the exchange on which to
contracts are traded.
Forward Contracts. The Fund may enter into foreign currency
exchange contracts ("Forward Contracts"), which obligate the seller
to deliver and the purchaser to take a specific amount of foreign
currency at a specific future date for a fixed price. A Forward
Contract involves bilateral obligations of one party to purchase,
and another party to sell, a specific currency at a future date
(which may be any fixed number of days from the date of the
contract agreed upon by the parties), at a price set at the time
the contract is entered into. These contracts are traded in the
interbank market conducted directly between currency traders
(usually large commercial banks) and their customers. The Fund may
enter into a Forward Contract in order to "lock in" the U.S. dollar
price of a security denominated in a foreign currency which it has
purchased or sold but which has not yet settled, or to protect
against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and a foreign currency.
There is a risk that use of Forward Contracts may reduce the
gain that would otherwise result from a change in the relationship
between the U.S. dollar and a foreign currency. To attempt to
limit its exposure to loss under Forward Contracts in a particular
foreign currency, the Fund limits its use of these contracts to the
amount of its net assets denominated in that currency or
denominated in a closely-correlated foreign currency. Forward
contracts include standardized foreign currency futures contracts
which are traded on exchanges and are subject to procedures and
regulations applicable to other Futures. The Fund may also enter
into a forward contract to sell a foreign currency denominated in
a currency other than that in which the underlying security is
denominated. This is done in the expectation that there is a
greater correlation between the foreign currency of the forward
contract and the foreign currency of the underlying investment than
between the U.S. dollar and the foreign currency of the underlying
investment. This technique is referred to as "cross hedging." The
success of cross hedging is dependent on many factors, including
the ability of the Manager to correctly identify and monitor the
correlation between foreign currencies and the U.S. dollar. To the
extent that the correlation is not identical, the Fund may
experience losses or gains on both the underlying security and the
cross currency hedge.
The Fund may use Forward Contracts to protect against
uncertainty in the level of future exchange rates. The use of
Forward Contracts does not eliminate fluctuations in the prices of
the underlying securities the Fund owns or intends to acquire, but
it does fix a rate of exchange in advance. In addition, although
Forward Contracts limit the risk of loss due to a decline in the
value of the hedged currencies, at the same time they limit any
potential gain that might result should the value of the currencies
increase.
There is no limitation as to the percentage of the Fund's
assets that may be committed to foreign currency exchange
contracts. The Fund does not enter into such forward contracts or
maintain a net exposure in such contracts to the extent that the
Fund would be obligated to deliver an amount of foreign currency in
excess of the value of the Fund's assets denominated in that
currency, or enter into a "cross hedge," unless it is denominated
in a currency or currencies that the Manager believes will have
price movements that tend to correlate closely with the currency in
which the investment being hedged is denominated. See "Tax Aspects
of Covered Calls and Hedging Instruments" below for a discussion of
the tax treatment of foreign currency exchange contracts.
The Fund may enter into Forward Contracts with respect to
specific transactions. For example, when the Fund enters into a
contract for the purchase or sale of a security denominated in a
foreign currency, or when the Fund anticipates receipt of dividend
payments in a foreign currency, the Fund may desire to "lock-in"
the U.S. dollar price of the security or the U.S. dollar equivalent
of such payment by entering into a Forward Contract, for a fixed
amount of U.S. dollars per unit of foreign currency, for the
purchase or sale of the amount of foreign currency involved in the
underlying transaction ("transaction hedge"). The Fund will
thereby be able to protect itself against a possible loss resulting
from an adverse change in the relationship between the currency
exchange rates during the period between the date on which the
security is purchased or sold, or on which the payment is declared,
and the date on which such payments are made or received.
The Fund may also use Forward Contracts to lock in the U.S.
dollar value of portfolio positions ("position hedge"). In a
position hedge, for example, when the Fund believes that foreign
currency may suffer a substantial decline against the U.S. dollar,
it may enter into a forward sale contract to sell an amount of that
foreign currency approximating the value of some or all of the
Fund's portfolio securities denominated in such foreign currency,
or when the Fund believes that the U.S. dollar may suffer a
substantial decline against a foreign currency, it may enter into
a forward purchase contract to buy that foreign currency for a
fixed dollar amount. In this situation the Fund may, in the
alternative, enter into a forward contract to sell a different
foreign currency for a fixed U.S. dollar amount where the Fund
believes that the U.S. dollar value of the currency to be sold
pursuant to the forward contract will fall whenever there is a
decline in the U.S. dollar value of the currency in which portfolio
securities of the Fund are denominated ("cross hedge").
The Fund's Custodian will identify and segregate liquid
securities of the Fund having a value equal to the aggregate amount
of the Fund's commitments under forward contracts to cover its
short positions. If the value of the segregated securities
declines, additional cash or securities will be segregated on a
daily basis so that the value of the segregated assets will equal
the amount of the Fund's commitments with respect to such
contracts. Unanticipated changes in currency prices may result in
poorer overall performance for the Fund than if it had not entered
into such contracts.
The precise matching of the Forward Contract amounts and the
value of the securities involved will not generally be possible
because the future value of such securities in foreign currencies
will change as a consequence of market movements in the value of
these securities between the date the Forward Contract is entered
into and the date it is sold. Accordingly, it may be necessary for
the Fund to purchase additional foreign currency on the spot (i.e.,
cash) market (and bear the expense of such purchase), if the market
value of the security is less than the amount of foreign currency
the Fund is obligated to deliver and if a decision is made to sell
the security and make delivery of the foreign currency.
Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio
security if its market value exceeds the amount of foreign currency
the Fund is obligated to deliver. The projection of short-term
currency market movements is extremely difficult, and the
successful execution of a short-term hedging strategy is highly
uncertain. Forward Contracts involve the risk that anticipated
currency movements will not be accurately predicted, causing the
Fund to sustain losses on these contracts and transactions costs.
At or before the maturity of a Forward Contract requiring the
Fund to sell a currency, the Fund may either sell a portfolio
security and use the sale proceeds to make delivery of the currency
or retain the security and offset its contractual obligation to
deliver the currency by purchasing a second contract pursuant to
which the Fund will obtain, on the same maturity date, the same
amount of the currency that it is obligated to deliver. Similarly,
the Fund may close out a Forward Contract requiring it to purchase
a specified currency by entering into a second contract entitling
it to sell the same amount of the same currency on the maturity
date of the first contract. The Fund would realize a gain or loss
as a result of entering into such an offsetting Forward Contract
under either circumstance to the extent the exchange rate or rates
between the currencies involved moved between the execution dates
of the first contract and offsetting contract.
The cost to the Fund of engaging in Forward Contracts varies
with factors such as the currencies involved, the length of the
contract period and the market conditions then prevailing. Because
Forward Contracts are usually entered into on a principal basis, no
fees or commissions are involved. Because such contracts are not
traded on an exchange, the Fund must evaluate the credit and
performance risk of each particular counterparty under a Forward
Contract.
Although the Fund values its assets daily in terms of U.S.
dollars, it does not intend to convert its holdings of foreign
currencies into U.S. dollars on a daily basis. The Fund may
convert foreign currency from time to time, and investors should be
aware of the costs of currency conversion. Foreign exchange
dealers do not charge a fee for conversion, but they do seek to
realize a profit based on the difference between the prices at
which they buy and sell various currencies. Thus, a dealer may
offer to sell a foreign currency to the Fund at one rate, while
offering a lesser rate of exchange should the Fund desire to resell
that currency to the dealer.
Additional Information About Hedging Instruments and Their
Use. The Fund's Custodian, or a securities depository acting for
the Custodian, will act as the Fund's escrow agent, through the
facilities of the Options Clearing Corporation ("OCC"), as to the
investments on which the Fund has written options traded on
exchanges or as to other acceptable escrow securities, so that no
margin will be required from the Fund for such transactions. OCC
will release the securities on the expiration of the option or upon
the Fund's entering into a closing transaction. An option position
may be closed out only on a market which provides secondary trading
for options of the same series, and there is no assurance that a
liquid secondary market will exist for any particular option.
The Fund's option activities may affect its turnover rate and
brokerage commissions. The exercise by the Fund of puts on
securities will cause the sale of related investments, increasing
portfolio turnover. Although such exercise is within the Fund's
control, holding a put might cause the Fund to sell the related
investments for reasons which would not exist in the absence of the
put. The Fund will pay a brokerage commission each time it buys a
put or call, sells a call, or buys or sells an underlying
investment in connection with the exercise of a put or call. Such
commissions may be higher than those which would apply to direct
purchases or sales of such underlying investments. Premiums paid
for options are small in relation to the market value of the
related investments, and consequently, put and call options offer
large amounts of leverage. The leverage offered by trading in
options could result in the Fund's net asset value being more
sensitive to changes in the value of the underlying investments.
When the Fund writes an over-the-counter ("OTC") option, it
will enter into an arrangement with a primary U.S. Government
securities dealer, which would establish a formula price at which
the Fund would have the absolute right to repurchase that OTC
option. That formula price would generally be based on a multiple
of the premium received for the option, plus the amount by which
the option is exercisable below the market price of the underlying
security (that is, the extent to which the option is "in-the-
money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be
invested in illiquid securities, stated in the Prospectus) the
mark-to-market value of any OTC option held by it unless the option
is subject to a buy-back agreement by the executing broker. The
Securities and Exchange Commission ("SEC") is evaluating whether
OTC options should be considered liquid securities, and the
procedure described above could be affected by the outcome of that
evaluation.
Regulatory Aspects of Hedging Instruments. The Fund is
required to operate within certain guidelines and restrictions with
respect to its use of Futures and options on Futures established by
the Commodity Futures Trading Commission ("CFTC"). In particular
the Fund is exempted from registration with the CFTC as a
"commodity pool operator" if the Fund complies with the
requirements of Rule 4.5 adopted by the CFTC. The Rule does not
limit the percentage of the Fund's assets that may be used for
Futures margin and related options premiums for a bona fide hedging
position. However, under the Rule the Fund must limit its
aggregate initial futures margin and related option premiums to no
more than 5% of the Fund's total assets for hedging strategies that
are not considered bona fide hedging strategies under the Rule.
Under the Rule, the Fund also must use short Futures and Futures
options positions solely for "bona fide hedging purposes" within
the meaning and intent of the applicable provisions of the
Commodity Exchange Act.
Transactions in options by the Fund are subject to limitations
established by each of the option exchanges governing the maximum
number of options that may be written or held by a single investor
or group of investors acting in concert, regardless of whether the
options were written or purchased on the same or different
exchanges or are held in one or more accounts or through one or
more exchanges or brokers. Thus, the number of options which the
Fund may write or hold may be affected by options written or held
by other entities, including other investment companies having the
same advisor as the Fund, or an advisor that is an affiliate of the
Fund's advisor. Position limits also apply to Futures. An
exchange may order the liquidation of positions found to be in
violation of those limits and may impose certain other sanctions.
Due to requirements under the Investment Company Act of 1940 (the
"Investment Company Act"), when the Fund purchases a Future, the
Fund will maintain, in a segregated account or accounts with its
Custodian in an amount equal to the market value of the securities
underlying such Future, less the margin deposit applicable to it.
Tax Aspects of Covered Calls and Hedging Instruments. The
Fund intends to qualify as a "regulated investment company" under
the Internal Revenue Code (although it reserves the right not to
qualify). That qualification enables the Fund to "pass through"
its income and realized capital gains to shareholders without the
Fund having to pay tax on them. This avoids a "double tax" on that
income and capital gains, since shareholders normally will be taxed
on the dividends and capital gains they receive from the Fund
(unless the Fund's shares are held in a retirement account or the
shareholder is otherwise exempt from tax). One of the tests for
the Fund's qualification as a regulated investment company is that
less than 30% of its gross income must be derived from gains
realized on the sale of securities held for less than three months.
To comply with that 30% cap, the Fund will limit the extent to
which it engages in the following activities, but will not be
precluded from them: (1) selling investments, including Stock Index
Futures, held for less than three months, whether or not they were
purchased on the exercise of a call held by the Fund; (2)
purchasing options which expire in less than three months; (3)
effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (4)
exercising puts or calls held by the Fund for less than three
months; or (5) writing calls on investments held less than three
months.
Certain foreign currency exchange contracts (Forward
Contracts) in which the Fund may invest are treated as "Section
1256 contracts." Gains or losses relating to Section 1256
contracts generally are characterized under the Internal Revenue
Code as 60% long-term and 40% short-term capital gains or losses.
However, foreign currency gains or losses arising from certain
Section 1256 contracts (including Forward Contracts) generally are
treated as ordinary income or loss. In addition, Section 1256
contracts held by the Fund at the end of each taxable year are
"marked-to market" with the result that unrealized gains or losses
are treated as though they were realized. These contracts also may
be marked-to-market for purposes of the excise tax applicable to
investment company distributions and for other purposes under rules
prescribed pursuant to the Internal Revenue Code. An election can
be made by the Fund to exempt these transactions from this mark-to-
market treatment.
Certain Forward Contracts entered into by the Fund may result
in "straddles" for Federal income tax purposes. The straddle rules
may affect the timing and character of gains (or losses) recognized
by the Fund on straddle positions. Generally, a loss sustained on
the disposition of a position making up a straddle is allowed only
to the extent such loss exceeds any unrecognized gain in the
offsetting positions making up the straddle. Disallowed loss is
generally allowed at the point where there is no unrecognized gain
in the offsetting positions making up the straddle, or the
offsetting position is disposed of.
Under the Internal Revenue Code, generally gains or losses
attributable to fluctuations in exchange rates that occur between
the time the Fund accrues interest or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and
the time the Fund actually collects such receivables or pays such
liabilities generally are treated as ordinary income or ordinary
loss. Similarly, on disposition of debt securities denominated in
a foreign currency and on disposition of foreign currency forward
contracts, gains or losses attributable to fluctuations in the
value of a foreign currency between the date of acquisition of the
security or contract and the date of disposition also are treated
as ordinary gain or loss. Currency gains and losses are offset
against market gains and losses before determining a net "Section
988" gain or loss under the Internal Revenue Code, which may
increase or decrease the amount of the Fund's investment company
income available for distribution to its shareholders.
Risks of Hedging With Options and Futures. In addition to
the risks with respect to options discussed in the Prospectus and
above, there is a risk in using short hedging by selling Futures to
attempt to protect against decline in value of the Fund's portfolio
securities (due to an increase in interest rates) that the prices
of such Futures will correlate imperfectly with the behavior of the
cash (i.e., market value) prices of the Fund's securities. The
ordinary spreads between prices in the cash and futures markets are
subject to distortions due to differences in the natures of those
markets. First, all participants in the futures markets are
subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close
out futures contracts through offsetting transactions which could
distort the normal relationship between the cash and futures
markets. Second, the liquidity of the futures markets depend on
participants entering into offsetting transactions rather than
making or taking delivery. To the extent participants decide to
make or take delivery, liquidity in the futures markets could be
reduced, thus producing distortion. Third, from the point of view
of speculators, the deposit requirements in the futures markets are
less onerous than margin requirements in the securities markets.
Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition
of the Fund's portfolio diverges from the securities included in
the applicable index. To compensate for the imperfect correlation
of movements in the price of the securities being hedged and
movements in the price of the Hedging Instruments, the Fund may use
Hedging Instruments in a greater dollar amount than the dollar
amount of securities being hedged if the historical volatility of
the prices of such securities being hedged is more than the
historical volatility of the applicable index. It is also possible
that where the Fund has used Hedging Instruments in a short hedge,
the market may advance and the value of securities held in the
Fund's portfolio may decline. If this occurred, the Fund would
lose money on the Hedging Instruments and also experience a decline
in value in its securities. However, while this could occur for
a very brief period or to a very small degree, over time the value
of a diversified portfolio of securities will tend to move in the
same direction as the indices upon which the Hedging Instruments
are based.
If the Fund uses Hedging Instruments to establish a position
in the securities markets as a temporary substitute for the
purchase of individual securities (long hedging) by buying Futures
and/or calls on such Futures or on securities, it is possible that
the market may decline; if the Fund then concludes not to invest in
such securities at that time because of concerns as to possible
further market decline or for other reasons, the Fund will realize
a loss on the Hedging Instruments that is not offset by a reduction
in the price of the securities purchased.
Borrowing for Leverage. From time to time, the Fund may
increase its ownership of securities by borrowing from banks on an
unsecured basis and investing the borrowed funds, subject to the
restrictions stated in the Prospectus. Any such borrowing will be
made only from banks, and, pursuant to the requirements of the
Investment Company Act of 1940 (the "Investment Company Act"), will
only be made to the extent that the value of the Fund's assets,
less its liabilities other than borrowings, is equal to at least
300% of all borrowings including the proposed borrowing. If the
value of the Fund's assets, when computed in that manner, should
fail to meet the 300% asset coverage requirement, the Fund is
required within three days to reduce its bank debt to the extent
necessary to meet that requirement. To do so, the Fund may have to
sell a portion of its investments at a time when independent
investment judgment would not dictate such sale. Interest on money
borrowed is an expense the Fund would not otherwise incur, so that
during periods of substantial borrowings, its expenses may increase
more than funds that do not borrow.
Foreign Securities. "Foreign securities" include equity and
debt securities of companies organized under the laws of countries
other than the United States and debt securities of foreign
governments that are traded on foreign securities exchanges or in
the foreign over-the-counter markets. Securities of foreign
issuers that are represented by American Depository Receipts or
that are listed on a U.S. securities exchange or traded in the U.S.
over-the-counter markets are not considered "foreign securities"
for the purpose of the Fund's investment allocations, because they
are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held
abroad.
Investing in foreign securities offers the Fund potential
benefits not available from investing solely in securities of
domestic issuers, such as the opportunity to invest in foreign
issuers that appear to offer growth potential, or in foreign
countries with economic policies or business cycles different from
those of the U.S., or to reduce fluctuations in portfolio value by
taking advantage of foreign stock markets that do not move in a
manner parallel to U.S. markets. In buying foreign securities, the
Fund may convert U.S. dollars into foreign currency, but only to
effect securities transactions on foreign securities exchanges and
not to hold such currency as an investment. If the Fund's
portfolio securities are held abroad, the countries in which they
may be held and the sub-custodians holding them must be approved by
the Fund's Board of Trustees where required under applicable rules
of the Securities and Exchange Commission. In buying foreign
securities, the Fund may convert U.S. dollars into foreign
currency, but only to effect securities transactions on foreign
securities exchanges and not to hold such currency as an
investment.
Risks of Foreign Investing. Investing in foreign securities
involves considerations and possible risks not typically associated
with investing in securities in the U.S. The values of foreign
securities will be affected by changes in currency rates or
exchange control regulations or currency blockage, application of
foreign tax laws, including withholding taxes, changes in
governmental administration or economic or monetary policy (in the
U.S. or abroad) or changed circumstances in dealings between
nations. There may be a lack of public information about foreign
issuers. Foreign countries may not have financial reporting,
accounting and auditing standards comparable to those that apply to
U.S. issuers. Costs will be incurred in connection with
conversions between various currencies. Foreign brokerage
commissions are generally higher than commissions in the U.S., and
foreign securities markets may be less liquid, more volatile and
less subject to governmental regulation than in the U.S. They may
have increased delays in setting portfolio transactions.
Investments in foreign countries could be affected by other factors
not generally thought to be present in the U.S., including
expropriation or nationalization, confiscatory taxation and
potential difficulties in enforcing contractual obligations, and
could be subject to extended settlement periods.
Illiquid and Restricted Securities. To enable the Fund to
sell restricted securities not registered under the Securities Act
of 1933, the Fund may have to cause those securities to be
registered. The expenses of registration of restricted securities
may be negotiated by the Fund with the issuer at the time such
securities are purchased by the Fund, if such registration is
required before such securities may be sold publicly. When
registration must be arranged because the Fund wishes to sell the
security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would
be permitted to sell them. The Fund would bear the risks of any
downward price fluctuation during that period. The Fund may also
acquire, through private placements, securities having contractual
restrictions on their resale, which might limit the Fund's ability
to dispose of such securities and might lower the amount realizable
upon the sale of such securities. Illiquid securities include
repurchase agreements maturing in more than seven days, or certain
participation interests other than those with puts exercisable
within seven days.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those
percentage restrictions do not limit purchases of restricted
securities that are eligible for sale to qualified institutional
purchasers pursuant to Rule 144A under the Securities Act of 1933,
provided that those securities have been determined to be liquid by
the Board of Trustees of the Fund or by the Manager under Board-
approved guidelines. Those guidelines take into account the trading
activity for such securities and the availability of reliable
pricing information, among other factors. If there is a lack of
trading interest in a particular Rule 144A security, the Fund's
holding of that security may be deemed to be illiquid.
Loans of Portfolio Securities. The Fund may lend its
portfolio securities subject to the restrictions stated in the
Prospectus. Repurchase transactions are not considered "loans" for
the purpose of the Fund's limit on the percentage of its assets
that can be loaned. Under applicable regulatory requirements
(which are subject to change), the loan collateral on each business
day must at least equal the value of the loaned securities and must
consist of cash, bank letters of credit or securities of the U.S.
Government (or its agencies or instrumentalities). To be
acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of
the letter. Such terms and the issuing bank must be satisfactory
to the Fund. In a portfolio securities lending transaction, the
Fund receives from the borrower an amount equal to the interest
paid or the dividends declared on the loaned securities during the
term of the loan as well as the interest on the collateral
securities, less any finders', administrative or other fees the
Fund pays in connection with the loan. The terms of the Fund's
loans must meet applicable tests under the Internal Revenue Code
and must permit the Fund to reacquire loaned securities on five
days' notice or in time to vote on any important matter.
Repurchase Agreements. The Fund may acquire securities
subject to repurchase agreements for liquidity purposes to meet
anticipated redemptions, or pending the investment of the proceeds
from the sale of fund shares, or pending settlement of purchases of
portfolio securities. In a repurchase transaction, the Fund
acquires a security from, and simultaneously resells it to, an
approved vendor. An "approved vendor" is a U.S. commercial bank or
the U.S. branch of a foreign bank or a broker-dealer which has been
designated a primary dealer in government securities, which must
meet the credit requirements set by the Fund's Board of Trustees
from time to time. The repurchase price exceeds the purchase price
by an amount that reflects an agreed-upon interest rate effective
for the period during which the repurchase agreement is in effect.
The majority of these transactions run from day to day, and
delivery pursuant to the resale typically will occur within one to
five days of the purchase. Repurchase agreements are considered
"loans" under the Investment Company Act, collateralized by the
underlying security. The Fund's repurchase agreements require that
at all times while the repurchase agreement is in effect, the value
of the collateral must equal or exceed the repurchase price to
fully collateralize the repayment obligation. Additionally, the
Manager will impose creditworthiness requirements to confirm that
the vendor is financially sound and will continuously monitor the
collateral's value.
Short Sales "Against-the-Box". In this type of short sale,
while the short position is open, the Fund must own an equal amount
of the securities sold short, or by virtue of ownership of other
securities have the right, without payment of further
consideration, to obtain an equal amount of the securities sold
short. Short sales against-the-box may be made to defer, for
Federal income tax purposes, recognition of gain or loss on the
sale of securities "in-the-box" until the short position is closed
out. They may also be used to protect a gain on the security "in-
the-box" when the Fund does not want to sell it and recognize a
capital gain.
Temporary Defensive Investments. When the equity markets in
general are declining, the Fund may commit an increasing portion of
its assets to defensive securities. These may include the types of
securities described in the Prospectus. When investing for
defensive purposes, the Fund will normally emphasize investment in
short-term debt securities (that is, securities maturing in one
year or less from the date of purchase), since those types of
securities are generally more liquid and usually may be disposed of
quickly without significant gains or losses so that the Manager may
have liquid assets when it wishes to make investments in securities
for appreciation possibilities.
Other Investment Restrictions
The Fund's most significant investment restrictions are set
forth in the Prospectus. The following are fundamental policies,
and together with the Fund's fundamental policies described in the
Prospectus, cannot be changed without the vote of a "majority" of
the Fund's outstanding voting securities. Such a "majority" vote
is defined, under the Investment Company Act, as the vote of the
holders of the lesser of: 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of
more than 50% of the outstanding shares are present, or more than
50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
Invest in companies for the purpose of acquiring control or
management thereof;
Invest in commodities or commodities contracts other than
the hedging instruments permitted by any of its other fundamental
policies, whether or not any such hedging instrument is considered
to be a commodity or a commodity contract;
Invest in real estate or in interests in real estate, but
the Fund may purchase readily marketable securities of companies
holding real estate or interests therein;
Purchase securities on margin; however, the Fund may make
margin deposits in connection with any of the hedging instruments
permitted by any of its other fundamental policies;
Lend money, but the Fund may invest in all or a portion of
an issue of bonds, debentures, commercial paper, or other similar
corporate obligations of the types that are usually purchased by
institutions, whether or not publicly distributed; the Fund may
also make loans of portfolio securities, subject to the percentage
restrictions set forth in the Prospectus under the caption "Loans
of Portfolio Securities";
Mortgage or pledge any of its assets; however, this does not
prohibit the escrow arrangements contemplated by the writing of
covered call options or other collateral or margin arrangements in
connection with any hedging instruments permitted by any of its
other fundamental policies;
Underwrite securities of other companies, except insofar as
the Fund might be deemed to be an underwriter for purposes of the
Securities Act of 1933 in the resale of any securities held in its
own portfolio;
Invest in or hold securities of any issuer if those officers
and Trustees of the Fund or its adviser owning individually more
than 5% of the securities of such issuer together own more than 5%
of the securities of such issuer; or
Invest in interests in oil, gas or mineral exploration
leases or development programs.
Non-Fundamental Investment Restrictions. For purposes of
the Fund's policy not to concentrate its investments in any one
industry as described in "Other Investment Restrictions" in the
Prospectus, the Fund has adopted the industry classifications set
forth in Appendix A to this Statement of Additional Information.
This is not a fundamental policy.
How the Fund Is Managed
Organization and History. As a Massachusetts business trust, the
Fund is not required to hold, and does not plan to hold, regular
annual meetings of shareholders. The Fund will hold meetings when
required to do so by the Investment Company Act or other applicable
law, or when a shareholder meeting is called by the Trustees or
upon proper request of the shareholders. Shareholders have the
right, upon the declaration in writing or vote of two-thirds of the
outstanding shares of the Fund, to remove a Trustee. The Trustees
will call a meeting of shareholders to vote on the removal of a
Trustee upon the written request of the record holders of 10% of
its outstanding shares. In addition, if the Trustees receive a
request from at least 10 shareholders (who have been shareholders
for at least six months) holding shares of the Fund valued at
$25,000 or more or holding at least 1% of the Fund's outstanding
shares, whichever is less, stating that they wish to communicate
with other shareholders to request a meeting to remove a Trustee,
the Trustees will then either make the Fund's shareholder list
available to the applicants or mail their communication to all
other shareholders at the applicants' expense, or the Trustees may
take such other action as set forth under Section 16(c) of the
Investment Company Act.
The Fund's Declaration of Trust contains an express disclaimer
of shareholder or Trustee liability for the Fund's obligations, and
provides for indemnification and reimbursement of expenses out of
its property for any shareholder held personally liable for its
obligations. The Declaration of Trust also provides that the Fund
shall, upon request, assume the defense of any claim made against
any shareholder for any act or obligation of the Fund and satisfy
any judgment thereon. Thus, while Massachusetts law permits a
shareholder of a business trust (such as the Fund) to be held
personally liable as a "partner" under certain circumstances, the
risk of a Fund shareholder incurring financial loss on account of
shareholder liability is limited to the relatively remote
circumstances in which the Fund would be unable to meet its
obligations described above. Any person doing business with the
Trust, and any shareholder of the Trust, agrees under the Trust's
Declaration of Trust to look solely to the assets of the Trust for
satisfaction of any claim or demand which may arise out of any
dealings with the Trust, and the Trustees shall have no personal
liability to any such person, to the extent permitted by law.
Trustees and Officers of the Fund. The Fund's Trustees and
officers and their principal occupations and business affiliations
and occupations during the past five years are listed below. The
address of each Trustee and officer is Two World Trade Center, New
York, New York 10048-0203, unless another address is listed below.
Ms. Macaskill is not a director of Oppenheimer Money Market Fund,
Inc. Otherwise, all of the Trustees are also trustees of
Oppenheimer Fund, Oppenheimer Global Fund, Oppenheimer Growth Fund,
Oppenheimer Discovery Fund, Oppenheimer Enterprise Fund,
Oppenheimer Global Emerging Growth Fund, Oppenheimer Gold & Special
Minerals Fund, Oppenheimer International Growth Fund, Oppenheimer
Municipal Bond Fund, Oppenheimer Money Market Fund, Inc.,
Oppenheimer Capital Appreciation Fund, Oppenheimer New York
Municipal Fund, Oppenheimer California Municipal Fund, Oppenheimer
Multi-State Municipal Trust, Oppenheimer Multiple Strategies Fund,
Oppenheimer U.S. Government Trust, Oppenheimer Developing Markets
Fund, Oppenheimer Multi-Sector Income Trust and Oppenheimer World
Bond Fund (collectively the "New York-based Oppenheimer funds").
Ms. Macaskill and Messrs. Spiro, Bishop, Bowen, Donohue, Farrar and
Zack respectively hold the same offices with the other New York-
based Oppenheimer funds as with the Fund. As of _____________,
1997, the Trustees and officers of the Fund as a group owned of
record or beneficially less than 1% of the outstanding shares of
each class of the Fund. The foregoing statement does not reflect
ownership of shares held of record by an employee benefit plan for
employees of the Manager (for which plan a Trustee and an officer
listed below, Ms. Macaskill and Mr. Donohue, respectively, are
trustees), other than the shares beneficially owned under that plan
by the officers of the Fund listed below.
Leon Levy, Chairman of the Board of Trustees; Age: 72
31 West 52nd Street, New York, New York 10019
General Partner of Odyssey Partners, L.P. (investment
partnership) and Chairman of Avatar Holdings, Inc. (real
estate development).
Robert G. Galli, Trustee*; Age: 64
Vice Chairman of OppenheimerFunds, Inc. (the "Manager");
formerly he held the following positions: Vice President and
Counsel of Oppenheimer Acquisition Corp. ("OAC"), the
Manager's parent holding company; Executive Vice President,
General Counsel and a director of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"), Vice
President and a director of HarbourView Asset Management
Corporation ("HarbourView") and Centennial Asset Management
Corporation ("Centennial"), investment advisory subsidiaries
of the Manager, a director of Shareholder Financial Services,
Inc. ("SFSI") and Shareholder Services, Inc. ("SSI"), transfer
agent subsidiaries of the Manager, an officer of other
Oppenheimer funds.
Benjamin Lipstein, Trustee; Age: 74
591 Breezy Hill Road, Hillsdale, New York 12529
Professor Emeritus of Marketing, Stern Graduate School of
Business Administration, New York University; a director of
Sussex Publishers, Inc. (Publishers of Psychology Today on
Mother Earth News) and a director of Spy Magazine, L.P.
Bridget A. Macaskill, President and Trustee*; Age: 49
President, Chief Executive Officer and a Director of the
Manager and HarbourView; Chairman and a director of SSI and
SFSI; President and a director of OAC and Oppenheimer
Partnership Holdings, Inc., a holding company subsidiary of
the Manager; a director of Oppenheimer Real Asset Management,
Inc.; formerly an Executive Vice President of the Manager.
Elizabeth B. Moynihan, Trustee; Age: 68
801 Pennsylvania Avenue, N.W., Washington, DC 20004
Author and architectural historian; a trustee of the Freer
Gallery of Art (Smithsonian Institution), the Institute of
Fine Arts (New York University), National Building Museum; a
member of the Trustees Council, Preservation League of New
York State; a member of the Indo-U.S. Sub-Commission on
Education and Culture.
Kenneth A. Randall, Trustee; Age: 70
6 Whittaker's Mill, Williamsburg, Virginia 23185
A director of Dominion Resources, Inc. (electric utility
holding company), Dominion Energy, Inc. (electric power and
oil & gas producer), Enron-Dominion Cogen Corp. (congeneration
company), Prime Retail, Inc. (commercial building operator)
and REIT Developing & Operating Factory Discount Malls (real
estate investment trust): formerly President and Chief
Executive Officer of The Conference Board, Inc. (international
economic and business research) and a director of Kemper
Corporation (insurance and financial services company),
Fidelity Life Association (mutual life insurance company),
Lumbermens Mutual Casualty Company, American Motorists
Insurance Company and American Manufacturers Mutual Insurance
Company.
Edward V. Regan, Trustee; Age: 67
40 Park Avenue, New York, New York 10016
Chairman of Municipal Assistance Corporation for the City of
New York; Senior Fellow of Jerome Levy Economics Institute
and Bard College; a member of the U.S. Competitiveness Policy
Council; a director or GranCare, Inc. (healthcare provider);
formerly New York State Comptroller and a trustee of the New
York State and Local Retirement Fund.
Russell S. Reynolds, Jr., Trustee; Age: 65
8 Sound Shore Drive, Greenwich, Connecticut 06830
Founder and Chairman of Russell Reynolds Associates, Inc.
(executive recruiting); Chairman of Directorship Inc.
(corporate governance consulting) a director of XYAN Inc.
(Printing), Professional Staff Limited and American Scientific
Resources, Inc.; a trustee of Mystic Seaport Museum,
International House, Greenwich Historical Society and
Greenwich Hospital.
Donald W. Spiro, Vice Chairman Trustee*; Age: 71
Chairman Emeritus and a director of the Manager; formerly
Chairman of the Manager and the Distributor.
Pauline Trigere, Trustee; Age: 84
498 Seventh Avenue, New York, New York 10018
Chairman and Chief Executive Officer of Trigere, Inc. (design
and sale of women's fashions).
Clayton K. Yeutter, Trustee; Age: 66
1325 Merrie Ridge Road, McLean, Virginia 22101
Of Counsel to Hogan & Hartson (a law firm); a director of
B.A.T. Industries, Ltd. (tobacco and financial services),
Caterpillar, Inc. (machinery), ConAgra, Inc. (food and
agricultural products), Farmers Insurance Company (insurance),
FMC Corp. (chemicals and machinery), IMC Global, Inc.
(Chemicals and animal feed), and Texas Instruments, Inc.
(electronics); formerly (in descending chronological order)
Counselor to the President (Bush) for Domestic Policy,
Chairman of the Republican National Committee, Secretary of
the U.S. Department of Agriculture, and U.S. Trade
Representative.
Andrew J. Donohue, Secretary; Age: 47
Executive Vice President, General Counsel and a Director of
the Manager, the Distributor, HarbourView, SSI, SFSI,
Oppenheimer Partnership Holdings, Inc. and MultiSource
Services, Inc. (a broker-dealer); President and a director of
Centennial; President and a director of Oppenheimer Real Asset
Management, Inc.; Secretary and General Counsel of OAC; an
officer of other Oppenheimer funds.
Jane Putnam, Vice President and Portfolio Manager; Age: 36
Vice President of the Manager; previously a portfolio manager
and equity research analyst for Chemical Bank.
George C. Bowen, Treasurer; Age: 61
6803 South Tucson Way, Englewood, Colorado 80112
Senior Vice President and Treasurer of the Manager; Vice
President and Treasurer of the Distributor and HarbourView;
Senior Vice President, Treasurer, Assistant Secretary and a
director of Centennial; President, Treasurer and a director of
Centennial Capital Corporation; Senior Vice President,
Treasurer and Secretary of SSI; Vice President, Treasurer and
Secretary of SFSI; Treasurer of OAC; Treasurer of Oppenheimer
partnership Holdings, Inc.; Vice President and Treasurer of
Oppenheimer Real Asset Management, Inc.; Chief Executive
Officer, Treasurer and a director of Multisource Services,
Inc. (a broker-dealer); an officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 49
Senior Vice President and Associate General Counsel of the
Manager; Assistant Secretary of SSI and SFSI; an officer of
other Oppenheimer funds.
Robert J. Bishop, Assistant Treasurer; Age: 39
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; formerly a Fund Controller
for the Manager.
Scott T. Farrar, Assistant Treasurer; Age: 32
6803 South Tucson Way, Englewood, Colorado 80112
Vice President of the Manager/Mutual Fund Accounting; an
officer of other Oppenheimer funds; formerly a Fund Controller
for the Manager.
____________________
* A Trustee who is an "interested person" of the Fund as defined in
the Investment Company Act.
Remuneration of Trustees. The officers of the Fund and
certain Turstees are affiliated with the Manager. They and the
Trustees of the Fund (Ms. Macaskill and Messrs. Galli and Spiro are
also officers) who are affiliated with the Manager receive no
salary or fee from the Fund. The remaining Trustees of the Fund
received the compensation shown below from the Fund. The
compensation from the Fund was paid during the fiscal year ended
August 31, 1997. The compensation from all of the New York-based
Oppenheimer funds includes the Fund and is compensation received as
a director, trustee, managing general partner or member of a
committee of the Board of those funds during the calendar year
1996.
<TABLE>
<CAPTION>
Retirement
Benefits Total Compensation
Aggregate Accrued as From All
Compensation Part of New York-based
Name and Position From the Fund(1)Fund Expenses(1) Oppenheimer Funds(2)
<S> <C> <C> <C>
Leon Levy, $ $ $
Chairman and Trustee
Benjamin Lipstein $ $ $
Study Committee Chairman,
Audit Committee Member
and Trustee
Elizabeth B. Moynihan $ $ $
Study Committee Member
and Trustee
Kenneth A. Randall $ $ $
Audit Committee Chairman
and Trustee
Edward V. Regan $ $ $
Proxy Committee Chairman,(3)
Audit Committee Member
and Trustee
Russell S. Reynolds, Jr. $ $ $
Proxy Committee Member(3)
and Trustee
Pauline Trigere, Trustee $ $ $
Clayton K. Yeutter $ $ $
Proxy Committee Member(3)
and Trustee
______________________
(1)For the fiscal period ended August 31, 1996.
(2)For the 1995 calendar year (prior to the inception of the Proxy Committee)
during which the New York-based Oppenheimer funds listed in the first paragraph
of this section, including Oppenheimer Mortgage Income Fund and Oppenheimer Time
Fund (which ceased operation following the acquisition of their assets by certain
other Oppenheimer funds) but excluding Oppenheimer International Growth Fund,
which had not yet commenced operations.
(3)Committee position held during a portion of the period shown. The Study, Audit
and Proxy Committees meet for all New York-based Oppenheimer funds and all fees
are allocated among the funds by the Board.
</TABLE>
The Fund has adopted a retirement plan that provides for
payment to a retired Trustee of up to 80% of the average
compensation paid during that Trustee's five years of service in
which the highest compensation was received. A Trustee must serve
in that capacity for any of the New York-based Oppenheimer funds
for at least 15 years to be eligible for the maximum payment.
Because each Trustee's retirement benefits will depend on the
amount of the Trustee's future compensation and length of service,
the amount of those benefits cannot be determined at this time, nor
can the Fund estimate the number of years of credited service that
will be used to determine those benefits. During the fiscal year
ended August 31, 1997, $_____ was accrued for the Fund's projected
retirement benefit obligations).
Major Shareholders. As of _________, 1997, no person owned
of record or was known by the Fund to own beneficially 5% or more
of any class of the Fund's outstanding shares.
The Manager and Its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled
by Massachusetts Mutual Life Insurance Company. OAC is also owned
in part by certain of the Manager's directors and officers, some of
whom also serve as officers of the Fund, and two of whom (Messrs.
Galli and Spiro) serve as Trustees of the Fund.
The Manager and the Fund have a Code of Ethics. It is designed
to detect and prevent improper personal trading by certain
employees, including portfolio managers, that would compete with or
take advantage of the Fund's portfolio transactions. Compliance
with the Code of Ethics is carefully monitored and strictly
enforced by the Manager.
Portfolio Management. The Portfolio Manager of the Fund
is Jane Putnam, who is principally responsible for the day-to-day
management of the Fund's portfolio. Ms. Putnam's background is
described in the Prospectus under "Portfolio Manager." Other
members of the Manager's Equity Portfolio Department, particularly
Robert Doll, provide the Portfolio Manager with counsel and support
in managing the Fund's portfolio.
The Investment Advisory Agreement. The investment advisory
agreement between the Manager and the Fund requires the Manager, at
its expense, to provide the Fund with adequate office space,
facilities and equipment, and to provide and supervise the
activities of all administrative and clerical personnel required to
provide effective corporate administration for the Fund, including
the compilation and maintenance of records with respect to its
operations, the preparation and filing of specified reports, and
composition of proxy materials and registration statements for
continuous public sale of shares of the Fund.
Expenses not expressly assumed by the Manager under the
Investment Advisory Agreement or by the Distributor under the
General Distributor's Agreement are paid by the Fund. The
Investment Advisory Agreement lists examples of expenses paid by
the Fund. The major categories relate to interest, taxes,
brokerage commissions, fees to certain Trustees, legal and audit
expenses, custodian and transfer agent expenses, share issuance
costs, certain printing and registration costs and non-recurring
expenses, including litigation costs. For the Fund's fiscal year
ended December 31, 1995, for the fiscal period ended August 31,
1996 and the fiscal year ended August 31, 1997, the management
fees paid by the Fund to the Manager were $3,882,505, $3,767,997
and $______, respectively.
The Investment Advisory Agreement contains no provision
limiting the Fund's expenses. However, independently of the
Investment Advisory Agreement, the Manager has voluntarily
undertaken that the total expenses of the Fund in any fiscal year
(including the management fee but excluding taxes, interest,
brokerage commissions, distribution assistance payments and
extraordinary expenses such as litigation costs) shall not exceed
the most stringent expense limitation imposed under state law
applicable to the Fund. Pursuant to the undertaking, the Manager's
fee would be reduced at the end of a month so that there will not
be any accrued but unpaid liability under this undertaking. No
expense assumption was made by the Manager during the fiscal year
ended August 31, 1997 under this voluntary expense assumption. Any
assumption of the Fund's expenses under this limitation would have
lowered the Fund's overall expense ratio and increase its total
return during any period in which expenses are limited. Due to
changes in federal securities laws, such state regulatory
limitations no longer apply, and the Manager hereby withdraws this
voluntary undertaking.
The Investment Advisory Agreement provides that in the absence
of willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard for its
obligations and duties under the Investment Advisory Agreement, the
Manager is not liable for any loss resulting from a good faith
error or omission on its part with respect to any of its duties
thereunder. The Investment Advisory Agreement permits the Manager
to act as investment adviser for any other person, firm or
corporation and to use the name "Oppenheimer" in connection with
other investment companies for which it may act as investment
adviser or general distributor. If the Manager shall no longer act
as investment adviser to the Fund, the right of the Fund to use the
name "Oppenheimer" as part of its name may be withdrawn.
The Distributor. Under its General Distributor's Agreement
with the Fund, the Distributor acts as the Fund's principal
underwriter in the continuous public offering of the Fund's Class
A, Class B and Class C shares but is not obligated to sell a
specific number of shares. Expenses normally attributable to
sales, including advertising and the cost of printing and mailing
prospectuses, other than those furnished to existing shareholders,
are borne by the Distributor. During the Fund's fiscal year ended
December 31, 1995, for the fiscal period ended August 31, 1996 and
for the fiscal year ended August 31, 1997, the aggregate sales
charges on sales of the Fund's Class A shares were $594,161,
$609,225 and $________, respectively, of which the Distributor and
an affiliated broker-dealer retained in the aggregate $190,816,
$193,794 and $______ in those respective years. During the Fund's
fiscal year ended August 31, 1997, the contingent deferred sales
charges collected on the Fund's Class B shares totaled $_______ all
of which the Distributor retained. During the Fund's fiscal year
ended August 31, 1997, contingent deferred sales charges collected
on the Fund's Class C shares totaled $_____, all of which the
Distributor retained. For additional information about
distribution of the Fund's shares and the expenses connected with
such activities, please refer to "Distribution and Service Plans,"
below.
The Transfer Agent. OppenheimerFunds Services, the Fund's
Transfer Agent, is responsible for maintaining the Fund's
shareholder registry and shareholder accounting records, and for
shareholder servicing and administrative functions.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory Agreement. One of
the duties of the Manager under the Investment Advisory Agreement
is to arrange the portfolio transactions for the Fund. The
Investment Advisory Agreement contains provisions relating to the
employment of broker-dealers ("brokers") to effect the Fund's
portfolio transactions. In doing so, the Manager is authorized by
the advisory agreement to employ broker-dealers, including
"affiliated" brokers, as that term is defined in the Investment
Company Act, as may, in its best judgment based on all relevant
factors, implement the policy of the Fund to obtain, at reasonable
expense, the "best execution" (prompt and reliable execution at the
most favorable price obtainable) of such transactions. The Manager
need not seek competitive commission bidding but is expected to
minimize the commissions paid to the extent consistent with the
interest and policies of the Fund as established by its Board of
Trustees.
Under the Investment Advisory Agreement, the Manager is
authorized to select brokers that provide brokerage and/or research
services for the Fund and/or the other accounts over which the
Manager or its affiliates have investment discretion. The
commissions paid to such brokers may be higher than another
qualified broker would have charged if a good faith determination
is made by the Manager and the commission is fair and reasonable in
relation to the services provided. Subject to the foregoing
considerations, the Manager may also consider sales of shares of
the Fund and other investment companies managed by the Manager or
its affiliates as a factor in the selection of brokers for the
Fund's portfolio transactions.
Description of Brokerage Practices Followed by the Manager.
Subject to the provisions of the Investment Advisory Agreement, the
procedures and rules described above, allocations of brokerage are
generally made by the Manager's portfolio traders based upon
recommendations from the Manager's portfolio managers. In certain
instances portfolio managers may directly place trades and allocate
brokerage, also subject to the provisions of the advisory agreement
and the procedures and rules described above. In either case,
brokerage is allocated under the supervision of the Manager's
executive officers. Transactions in securities other than those
for which an exchange is the primary market are generally done with
principals or market makers. Brokerage commissions are paid
primarily for effecting transactions in listed securities or for
certain fixed-income agency transactions in the secondary market,
and are otherwise paid only if it appears likely that a better
price or execution can be obtained. When the Fund engages in an
option transaction, ordinarily the same broker will be used for the
purchase or sale of the option and any transaction in the
securities to which the option relates. When possible, concurrent
orders to purchase or sell the same security by more than one of
the accounts managed by the Manager or its affiliates are combined.
The transactions effected pursuant to such combined orders are
averaged as to price and allocated in accordance with the purchase
or sale orders actually placed for each account.
Most purchases of money market instruments and debt
obligations are principal transactions at net prices. Instead of
using a broker for those transactions, the Fund normally deals
directly with the selling or purchasing principal or market maker
unless it determines that a better price or execution can be
obtained by using a broker. Purchases of these securities from
underwriters include a commission or concession paid by the issuer
to the underwriter. Purchases from dealers include a spread
between the bid and asked prices. The Fund seeks to obtain prompt
execution of these orders at the most favorable net price.
The research services provided by a particular broker may be
useful only to one or more of the advisory accounts of the Manager
and its affiliates, and investment research received for the
commissions of those other accounts may be useful both to the Fund
and one or more of such other accounts. Such research, which may
be supplied by a third party at the instance of a broker, includes
information and analyses on particular companies and industries as
well as market or economic trends and portfolio strategy, receipt
of market quotations for portfolio evaluations, information
systems, computer hardware and similar products and services. If
a research service also assists the Manager in a non-research
capacity (such as bookkeeping or other administrative functions),
then only the percentage or component that provides assistance to
the Manager in the investment decision-making process may be paid
for in commission dollars. The Board of Trustees has permitted the
Manager to use concessions on fixed price offerings to obtain
research, in the same manner as is permitted for agency
transactions. The Board has also permitted the Manager to use
stated commissions on secondary fixed-income agency trades to
obtain research where the broker has represented to the Manager
that (i) the trade is not from or for the broker's own inventory,
(ii) the trade was executed by the broker on an agency basis at the
stated commissions and (iii) the trade is not a riskless principal
transaction.
The research services provided by brokers broaden the scope
and supplement the research activities of the Manager, by making
available additional views for consideration and comparisons, and
by enabling the Manager to obtain market information for the
valuation of securities held in the Fund's portfolio or being
considered for purchase. The Board of Trustees, including the
"independent" Trustees of the Fund (those Trustees of the Fund who
are not "interested persons" as defined in the Investment Company
Act, and who have no direct or indirect financial interest in the
operation of the Investment Advisory Agreement or the Distribution
and Service Plans described below) annually reviews information
furnished by the Manager as to the commissions paid to brokers
furnishing such services so that the Board may ascertain whether
the amount of such commissions was reasonably related to the value
or benefit of such services.
During the Fund's fiscal year ended December 31, 1995, for the
fiscal period ended August 31, 1996 and for the fiscal year ended
August 31, 1997, total brokerage commissions paid by the Fund (not
including spreads or concessions on principal transactions on a net
trade basis) were $923,800, $622,523 and $_______, respectively.
During the fiscal year ended August 31, 1997, $_____ was paid to
brokers as commissions in return for research services (including
special research, statistical information and execution); the
aggregate dollar amount of those transactions was $__________. The
transactions giving rise to those commissions were allocated in
accordance with the Manager's internal allocation procedures. [/R]
Performance of the Fund
Total Return Information. As described in the Prospectus, from
time to time the "average annual total return," "cumulative total
return," "average annual total return at net asset value" and
"cumulative total return at net asset value" of an investment in a
class of shares of the Fund may be advertised. An explanation of
how these total returns are calculated for each class and the
components of those calculations is set forth below. No
performance information is presented below for Class Y shares
because no Class Y shares were publicly offered during the fiscal
year ended August 31, 1997.
The Fund's advertisements of its performance data must, under
applicable rules of the Securities and Exchange Commission, include
the average annual total returns for each advertised class of
shares of the Fund for the 1, 5, and 10-year periods (or the life
of the class, if less) ending as of the most recently-ended
calendar quarter prior to the publication of the advertisement.
This enables an investor to compare the Fund's performance to the
performance of other funds for the same periods. However, a number
of factors should be considered before using such information as a
basis for comparison with other investments. An investment in the
Fund is not insured; its returns and share prices are not
guaranteed and normally will fluctuate on a daily basis. When
redeemed, an investor's shares may be worth more or less than their
original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The
returns of each class of shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to the particular class.
Average Annual Total Returns. The "average annual total
return" of each class is an average annual compounded rate of
return for each year in a specified number of years. It is the
rate of return based on the change in value of a hypothetical
initial investment of $1,000 ("P" in the formula below) held for a
number of years ("n") to achieve an Ending Redeemable Value ("ERV")
of that investment, according to the following formula:
1/n
(ERV)
(---) -1 = Average Annual Total Return
( P )
Cumulative Total Returns. The "cumulative total return"
calculation measures the change in value of a hypothetical
investment of $1,000 over an entire period of years. Its
calculation uses some of the same factors as average annual total
return, but it does not average the rate of return on an annual
basis. Cumulative total return is determined as follows:
ERV - P
------- = Total Return
P
In calculating total returns for Class A shares, the current
maximum sales charge of 5.75% (as a percentage of the offering
price) is deducted from the initial investment ("P") (unless the
return is shown at net asset value, as described below). For Class
B shares, payment of a contingent deferred sales charge of 5.0% for
the first year, 4.0% for the second year, 3.0% for the third and
fourth year, 2.0% for the fifth year and 1.0% for the sixth year,
and none thereafter, is applied as described in the Prospectus.
For Class C shares, the payment of the 1.0% contingent deferred
sales charge for the first 12 months is applied, as described in
the prospectus. Class Y shares are not subject to a sales charge.
Total returns also assume that all dividends and capital gains
distributions during the period are reinvested to buy additional
shares at net asset value per share, and that the investment is
redeemed at the end of the period.
The "average annual total returns" on an investment in Class
A shares of the Fund for the one, five and ten year periods ended
August 31, 1997, were ____%, ____% and ____%, respectively. The
"cumulative total return" on Class A shares for the ten year period
ended August 31, 1997, was ____%. During a portion of the periods
for which total returns are shown for Class A shares, the Fund's
maximum initial sales charge rate was higher; as a result,
performance returns on actual investments during those periods may
be lower than the results shown. The cumulative total return on
Class B shares of the Fund for the period from November 1, 1995
(the commencement of the offering of Class B shares) through August
31, 1997 was ____%. The average annual total returns on Class C
shares for the period from December 1, 1993, (the commencement of
the offering of Class C shares) through August 31, 1997 and for the
one-year period ended August 31, 1997 were ____% and ____%,
respectively.
Total Returns at Net Asset Value. From time to time the Fund
may also quote an average annual total return at net asset value or
a cumulative total return at net asset value for Class A, Class B
or Class C shares. Each is based on the difference in net asset
value per share at the beginning and the end of the period for a
hypothetical investment in that class of shares (without
considering front-end or contingent deferred sales charges) and
takes into consideration the reinvestment of dividends and capital
gains distributions. The cumulative total return at net asset
value of the Fund's Class A shares for the ten-year period ended
August 31, 1997 was ______%. The average annual total returns at
net asset value for the one, five and ten-year periods ended August
31, 1997, for Class A shares were ____%, ____% and ____%,
respectively. The cumulative total return at net asset value for
Class B shares for the period from November 1, 1995 through August
31, 1997 was ____%. The average annual total return at net asset
value for Class C shares for the period from December 1, 1993,
through August 31, 1997 and for the one-year period ended August
31, 1997 were ____% and ____% respectively.
Total return information may be useful to investors in
reviewing the performance of the Fund's Class A, Class B, Class C
or Class Y shares. However, when comparing total return of an
investment in Class A, Class B or Class C shares of the Fund with
that of other alternatives, investors should understand that as the
Fund is an aggressive equity fund seeking capital appreciation, its
shares are subject to greater market risks and volatility than
shares of funds having other investment objectives and that the
Fund is designed for investors who are willing to accept greater
risk of loss in the hopes of realizing greater gains.
Other Performance Comparisons. From time to time the Fund may also
include in its advertisements and sales literature performance
information about the Fund or rankings of the Fund's performance
cited in newspapers or periodicals, such as The New York Times.
These articles may include quotations of performance from other
sources, such as Lipper Analytical Services, Inc. ("Lipper") or
Morningstar, Inc. and Lipper is a widely-recognized independent
mutual fund monitoring service. Lipper monitors the performance of
regulated investment companies, including the Fund, and ranks their
performance for various periods based on categories relating to
investment objectives. The performance of the Fund's classes of
shares is ranked against (I) all other funds and (ii) all other
gold-oriented funds. The Lipper performance rankings are based on
total returns that include the reinvestment of capital gain
distributions and income dividends but do not take sales charges or
taxes into consideration.
From time to time the Fund may publish the star ranking of the
performance of its Class A, Class B, Class C or Class Y shares by
Morningstar, Inc., an independent mutual fund monitoring service.
Morningstar ranks mutual funds, including the Fund, monthly in
broad investment categories (domestic stock, international stock,
taxable bond, municipal bond and hybrid) based on risk-adjusted
investment return. Investment return measures a fund's three, five
and ten-year average annual total returns (when available) in
excess of 90-day U.S. Treasury bill returns after considering sales
charges and expenses. Risk measures fund performance below 90-day
U.S. Treasury bill monthly returns. Risk and investment return are
combined to produce star rankings reflecting performance relative
to the average fund in a fund's category. Five stars is the
"highest" ranking (top 10%), four stars is "above average" (next
22.5%), three stars is "average" (next 35%), two stars is "below
average" (next 22.5%) and one star is "lowest" (bottom 10%).
Morningstar ranks the Fund's Class A, Class B and Class C shares in
relation to other equity funds. Rankings are subject to change.
The Fund may also compare its performance to that of other
funds in its Morningstar Category. In addition to its star
rankings, Morningstar also categorizes and compares a fund's 3-year
performance based on Morningstar's classification of the fund's
investments and investment style, rather than how a fund defines
its investment objective. Morningstar's four broad categories are
each further subdivided into categories based on types of
investments and investment styles. Those comparisons by
Morningstar are based on the same risk and return measurements as
its star rankings but do not consider the effect of sales charges.
From time to time, the Fund's Manager may publish rankings or
ratings of the Manager (or Transfer Agent) or the investor services
provided by them to shareholders of the Oppenheimer funds, other
than performance rankings of the Oppenheimer funds themselves.
Those ratings or rankings of shareholder/investor services by third
parties may compare the Oppenheimer funds services to those of
other mutual fund families selected by the rating or ranking
services, and may be based upon the opinions of the rating or
ranking service itself, using its own research or judgment, or
based upon surveys of investors, brokers, shareholders or others.
Distribution and Service Plans
The Fund has adopted a Service Plan for Class A shares and
Distribution and Service Plans for Class B and Class C shares of
the Fund under Rule 12b-1 of the Investment Company Act pursuant to
which the Fund makes payments to the Distributor quarterly in
connection with the distribution and/or servicing of the shares of
that class, as described in the Prospectus. No such Plan has been
adopted for Class Y shares. Each Plan has been approved by a vote
of (i) the Board of Trustees of the Fund, including a majority of
the Independent Trustees, cast in person at a meeting called for
the purpose of voting on that Plan, and (ii) the holders of a
"majority" (as defined in the Investment Company Act) of the shares
of each class. For the Distribution and Service Plans for Class B
shares and Class C shares, such votes were cast by the Manager as
the sole initial holder of Class B and Class C shares of the Fund.
In addition, under the Plans the Manager and the Distributor,
in their sole discretion, from time to time may use their own
resources (which, in the case of the Manager, may include profits
from the advisory fee it receives from the Fund) to make payments
to brokers, dealers or other financial institutions (each is
referred to as a "Recipient" under the Plans) for distribution and
administrative services they perform at no cost to the Fund. The
Distributor and the Manager may, in their sole discretion, increase
or decrease the amount of payments they make from their own
resources to Recipients.
Unless terminated as described below, each Plan continues in
effect from year to year but only as long as its continuance is
specifically approved at least annually by the Fund's Board of
Trustees and its Independent Trustees by a vote cast in person at
a meeting called for the purpose of voting on such continuance.
Each Plan may be terminated at any time by the vote of a majority
of the Independent Trustees or by the vote of the holders of a
"majority" (as defined in the Investment Company Act) of the
outstanding shares of that class. None of the Plans may be amended
to increase materially the amount of payments to be made unless
such amendment is approved by shareholders of the Class affected by
the amendment. In addition, because Class B shares of the Fund
automatically convert into Class A shares after six years, the Fund
is required by a Securities and Exchange Commission rule to obtain
the approval of Class B as well as Class A shareholders for a
proposed amendment to the Class A Plan that would materially
increase the amount to be paid by Class A shareholders under the
Class A Plan. Such approval must be by a "majority" of the Class
A and Class B shares (as defined in the Investment Company Act),
voting separately by class. All material amendments must be
approved by the Independent Trustees.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Trustees at
least quarterly on the amount of all payments made pursuant to each
Plan, the purpose for which each payment was made and the identity
of each Recipient that received any payment. The reports for the
Class B and Class C Plans shall also include the distribution costs
for that quarter, and such costs for previous fiscal periods that
have been carried forward, as explained in the Prospectus and
below. Those reports, including the allocations on which they are
based, will be subject to the review and approval of the
Independent Trustees in the exercise of their fiduciary duty. Each
Plan further provides that while it is in effect, the selection and
nomination of those Trustees of the Fund who are not "interested
persons" of the Fund is committed to the discretion of the
Independent Trustees. This does not prevent the involvement of
others in such selection and nomination if the final decision on
selection or nomination is approved by a majority of the
Independent Trustees.
Under the Plans, no payment will be made to any Recipient in
any quarter if the aggregate net asset value of all Fund shares
held by the Recipient for itself and its customers, did not exceed
a minimum amount, if any, that may be determined from time to time
by a majority of the Fund's Independent Trustees. Initially, the
Board of Trustees has set the fee at the maximum rate and set no
minimum amount.
The Fund's shareholders approved a new Service Plan for Class
A shares, effective July 1, 1994. Under the old plan, payments
were made to a Recipient only as to Class A shares acquired on or
after April 1, 1991. Under the current Plan, payments are based on
the value of all Class A shares, whenever acquired. The Fund's
Board of Trustees has set the annual rate for assets representing
Class A shares of the Fund sold on or after April 1, 1991, at
0.25%, and has set the annual rate for assets representing Class A
shares sold before April 1, 1991, at 0.15% (the Board has authority
to increase that rate to no more than 0.25%).
For the fiscal year ended August 31, 1997, payments under the
Class A Plan totaled $_______, all of which was paid by the
Distributor to Recipients, including $______ paid to MML Investor
Services, Inc., an affiliate of the Distributor. Payments made
under the Class B Plan during the period from November 1, 1995
through August 31, 1997 totaled $______, of which $______ was
retained by the Distributor. Payments made under the Class C Plan
during that fiscal period totaled $______, including $__ paid to
MML Investor Services, Inc. and $______ which was retained by the
Distributor.
Any unreimbursed expenses incurred by the Distributor with
respect to Class A shares for any fiscal year may not be recovered
in subsequent years. Payments received by the Distributor under
the Plan for Class A shares will not be used to pay any interest
expense, carrying charge, or other financial costs, or allocation
of overhead by the Distributor. The Class B and Class C Plans
allow the service fee payment to be paid by the Distributor to
Recipients in advance for the first year such shares are
outstanding, and thereafter on a quarterly basis, as described in
the Prospectus. The advance payment is based on the net asset
value of the shares sold. An exchange of shares does not entitle
the Recipient to an advance service fee payment. In the event
Class B or Class C shares are redeemed during the first year that
the shares are outstanding, the Recipient will be obligated to
repay a pro rata portion of the advance payment for those shares to
the Distributor.
Although the Class B and Class C Plans permit the Distributor
to retain both the asset-based sales charges and the service fees
on Class B and Class C shares, or to pay Recipients the service fee
on a quarterly basis without payment in advance, the Distributor
presently intends to pay the service fee to Recipients in the
manner described above. A minimum holding period may be
established from time to time under the Class B and Class C Plans
by the Board. Initially, the Board has set no minimum holding
period. All payments under the Class B and Class C Plans are
subject to the limitations imposed by the Conduct Rules of the
National Association of Securities Dealers, Inc. on payments of
asset-based sales charges and service fees.
The Class C Plan allows for the carry-forward of distribution
expenses, to be recovered from asset-based sales charges in
subsequent fiscal periods, as described in the Prospectus. The
asset-based sales charge paid to the Distributor by the Fund under
the Class C Plan is intended to allow the Distributor to recoup the
cost of sales commissions paid to authorized brokers and dealers at
the time of sale, plus financing costs, as described in the
Prospectus. Such payments may also be used to pay for the
following expenses in connection with the distribution of Class C
shares: (i) financing the advance of the service fee payment to
Recipients under the Class C Plan, (ii) compensation and expenses
of personnel employed by the Distributor to support distribution of
Class C shares, and (iii) costs of sales literature, advertising
and prospectuses (other than those furnished to current
shareholders) and state "blue sky" registration fees.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B, Class C and
Class Y Shares. The availability of four classes of shares permits
an investor to choose the method of purchasing shares that is more
beneficial to the investor depending on the amount of the purchase,
the length of time the investor expects to hold shares and other
relevant circumstances. Investors should understand that the
purpose and function of the deferred sales charge and asset-based
sales charge with respect to Class B and Class C shares are the
same as those of the initial sales charge with respect to Class A
shares. Any salesperson or other person entitled to receive
compensation for selling Fund shares may receive different
compensation with respect to one class of shares than the other.
The Distributor normally will not accept any order for $500,000 or
more of Class B shares or $1 million or more of Class C shares on
behalf of a single investor (not including dealer "street name" or
omnibus accounts) because generally it will be more advantageous
for that investor to purchase Class A shares of the Fund instead.
The fourth class of shares may be purchased only be certain
institutional investors at net asset value per share (the "Class Y
shares").
The four classes of shares each represent an interest in the
same portfolio investments of the Fund. However, each class has
different shareholder privileges and features. The net income
attributable to Class B and Class C shares and the dividends
payable on Class B and Class C shares will be reduced by
incremental expenses borne solely by that class, including the
asset-based sales charge to which Class B and Class C shares are
subject.
The conversion of Class B shares to Class A shares after six
years is subject to the continuing availability of a private letter
ruling from the Internal Revenue Service, or an opinion of counsel
or tax adviser, to the effect that the conversion of Class B shares
does not constitute a taxable event for the holder under Federal
income tax law. If such a revenue ruling or opinion is no longer
available, the automatic conversion feature may be suspended, in
which event no further conversions of Class B shares would occur
while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative
net asset value of the two classes, without the imposition of a
sales charge or fee, such exchange could constitute a taxable event
for the holder, and absent such exchange, Class B shares might
continue to be subject to the asset-based sales charge for longer
than six years.
The methodology for calculating the net asset value, dividends
and distributions of the Fund's Class A, Class B and Class C shares
recognizes two types of expenses. General expenses that do not
pertain specifically to any class are allocated pro rata to the
shares of each class, based on the percentage of the net assets of
such class to the Fund's total assets, and then equally to each
outstanding share within a given class. Such general expenses
include (i) management fees, (ii) legal, bookkeeping and audit
fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other
materials for current shareholders, (iv) fees to Independent
Trustees, (v) custodian expenses, (vi) share issuance costs, (vii)
organization and start-up costs, (viii) interest, taxes and
brokerage commissions, and (ix) non-recurring expenses, such as
litigation costs. Other expenses that are directly attributable to
a class are allocated equally to each outstanding share within that
class. Such expenses include (I) Distribution and/or Service Plan
fees, (ii) incremental transfer and shareholder servicing agent
fees and expenses, (iii) registration fees and (iv) shareholder
meeting expenses, to the extent that such expenses pertain to a
specific class rather than to the Fund as a whole.
Determination of Net Asset Values Per Share. The net asset values
per share of Class A, Class B, Class C and Class Y shares of the
Fund are determined as of the close of business of The New York
Stock Exchange (the "Exchange") on each day that the Exchange is
open, by dividing the value of the Fund's net assets attributable
to that Class by the number of shares of that class that are
outstanding. The Exchange normally closes at 4:00 P.M. New York
time, but may close earlier on some days (for example, in case of
weather emergencies or days falling before a holiday). The
Exchange's most recent annual holiday schedule (which is subject to
change) states that it will close on New Year's Day, Presidents'
Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. It may also close on other
days. The Fund may invest a portion of its assets in foreign
securities primarily listed on foreign exchanges which may trade on
Saturdays or customary U.S. business holidays on which the Exchange
is closed. Because the Fund's price and net asset value will not
be calculated on those days, the Fund's net asset values per share
of Class A, Class B and Class C shares of the Fund may be
significantly affected of days when shareholders may not purchase
or redeem shares.
The Fund's Board of Trustees has established procedures for
the valuation of the Fund's securities, generally as follows: (I)
equity securities traded on a securities exchange or on the
Automated Quotation System ("NASDAQ") of the Nasdaq Stock Market,
Inc. for which last sale information is regularly reported are
valued at the last reported sale price on their primary exchange or
NASDAQ that day (or, in the absence of sales that day, at values
based on the last sale price of the preceding trading day, or
closing bid and asked prices that day); (ii) securities traded on
a foreign securities exchange are valued generally at the last
sales price available to the pricing service approved by the Fund's
Board of Trustees or to the Manager as reported by the principal
exchange on which the security is traded at its last trading
session on or immediately preceding the valuation date, or at the
mean between "bid" and "asked" prices obtained from the principal
exchange or two active market makers in the security on the basis
of reasonable inquiry; (iii) long-term debt securities having a
remaining maturity in excess of 60 days are valued based on the
mean between the "bid" and "asked" prices determined by a portfolio
pricing service approved by the Fund's Board of Trustees or
obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry; (iv) debt instruments
having a maturity of more than 397 days when issued, and non-money
market type instruments having a maturity of 397 days or less when
issued, which have a remaining maturity of 60 days or less are
valued at the mean between "bid" and "asked" prices determined by
a pricing service approved by the Fund's Board of Trustees or
obtained by the Manager from two active market makers in the
security on the basis of reasonable inquiry; (v) money market-type
debt securities that had a maturity of less than 397 days when
issued that have a remaining maturity of 60 days or less are valued
at cost, adjusted for amortization of premiums and accretion of
discounts; and (vi) securities (including restricted securities)
not having readily-available market quotations are valued at fair
value determined under the Board's procedures. If the Manager is
unable to locate two market makers willing to give quotes (see
(ii), (iii) and (iv) above), the security may be priced at the mean
between the "bid" and "asked" prices provided by a single active
market maker (which in certain cases may be the "bid" price if no
"asked" price is available).
In the case of U.S. Government Securities and mortgage-backed
securities, where last sale information is not generally available,
such pricing procedures may include matrix comparisons to the
prices for comparable instruments on the basis of quality, yield,
maturity and other special factors involved. The Manager may use
pricing services approved by the Board of Trustees to price any of
the types of securities described above to price U.S. Government
Securities, mortgage-backed securities, foreign government
securities and corporate bonds. The Manager will monitor the
accuracy of such pricing services, which may include comparing
prices used for portfolio evaluation to actual sales prices of
selected securities.
Trading in securities on European and Asian exchanges and
over-the-counter markets is normally completed before the close of
the New York Stock Exchange. Events affecting the values of
foreign securities traded in securities markets that occur between
the time their prices are determined and the close of the New York
Stock Exchange will not be reflected in the Fund's calculation of
net asset value unless the Board of Trustees or the Manager, under
procedures established by the Board of Trustees, determines that
the particular event is likely to effect a material change in the
value of such security. Foreign currency, including forward
contracts, will be valued at the closing price in the London
foreign exchange market that day as provided by a reliable bank,
dealer or pricing service. The values of securities denominated in
foreign currency will be converted to U.S. dollars at the closing
price in the London foreign exchange market that day as provided by
a reliable bank, dealer or pricing service.
Puts, calls and Futures are valued at the last sales price on
the principal exchange on which they are traded, or on NASDAQ, as
applicable, as determined by a pricing service approved by the
Board of Trustees or by the Manager. If there were no sales that
day, value shall be the last sale price on the preceding trading
day if it is within the spread of the closing bid and asked prices
on the principal exchange or on NASDAQ on the valuation date, or,
if not, value shall be the closing bid price on the principal
exchange or on NASDAQ on the valuation date. If the put, call or
future is not traded on an exchange or on NASDAQ, it shall be
valued at the mean between bid and asked prices obtained by the
Manager from two active market makers (which in certain cases may
be the bid price if no asked price is available).
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the
regular business day the Distributor is instructed to initiate the
Automated Clearing House transfer to buy the shares. Dividends
will begin to accrue on shares purchased by the proceeds of ACH
transfers on the business day the Fund receives Federal Funds for
such purchase through the ACH system before the close of The New
York Stock Exchange. The Exchange normally closes at 4:00 P.M.;
but may close earlier on certain days. If Federal Funds are
received on a business day after the close of the Exchange, the
shares will be purchased and dividends will begin to accrue on the
next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the ACH transfer is
initiated. The Distributor and the Fund are not responsible for
any delays in purchasing shares resulting from delays in ACH
transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a
reduced sales charge rate may be obtained for Class A shares under
Right of Accumulation and Letters of Intent because of the
economies of sales efforts and reduction in expenses realized by
the Distributor, dealers and brokers making such sales. No sales
charge is imposed in certain other circumstances described in the
Prospectus because the Distributor or dealer or broker incurs
little or no selling expenses. The term "immediate family" refers
to one's spouse, children, grandchildren, grandparents, parents,
parents-in-law, brothers and sisters, sons- and daughters-in-law,
a sibling's spouse, a spouse's siblings, aunts, uncles, nieces and
nephews.
The Oppenheimer Funds. The Oppenheimer funds are those
mutual funds for which the Distributor acts as the distributor or
the sub-distributor and include the following:
Oppenheimer Municipal Bond Fund
Oppenheimer New York Municipal Fund
Oppenheimer California Municipal Fund
Oppenheimer Intermediate Municipal Fund
Oppenheimer Insured Municipal Fund
Oppenheimer Main Street California
Municipal Fund
Oppenheimer Florida Municipal Fund
Oppenheimer Pennsylvania Municipal Fund
Oppenheimer New Jersey Municipal Fund
Oppenheimer Discovery Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Multiple Strategies
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth
Oppenheimer International Growth Fund
Oppenheimer Enterprise Fund
Oppenheimer Bond Fund for Growth
Oppenheimer LifeSpan Balanced Fund
Oppenheimer LifeSpan Growth
Fund
Oppenheimer LifeSpan Income Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government
Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Developing Markets Fund
Oppenheimer Strategic Income Fund
Oppenheimer International Bond Fund
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Real Asset Fund
Rochester Fund Municipals
Limited Term
New York Municipal Fund
Oppenheimer Disciplined Value Fund
Oppenheimer Disciplined Allocation Fund
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A
shares of each of the Oppenheimer funds except Money Market Funds
(under certain circumstances described herein, redemption proceeds
of Money Market Fund shares may be subject to a contingent
deferred sales charge).
Letters of Intent. A Letter of Intent (referred to as a
"Letter") is an investor's statement in writing to the Distributor
of the intention to purchase Class A shares of the Fund (and Class
A and Class B shares of other Oppenheimer funds during a 13-month
period (the "Letter of Intent period"), which may, at the
investor's request, include purchases made up to 90 days prior to
the date of the Letter. The Letter states the investor's intention
to make the aggregate amount of purchases of shares which, when
added to the investor's holdings of shares of those funds, will
equal or exceed the amount specified in the Letter. Purchases made
by reinvestment of dividends or distributions of capital gains and
purchases made at net asset value without sales charge do not count
toward satisfying the amount of the Letter. A Letter enables an
investor to count the Class A and Class B shares purchased under
the Letter to obtain the reduced sales charge rate on purchases of
Class A shares of the Fund (and other Oppenheimer funds) that
applies under the Right of Accumulation to current purchases of
Class A shares. Each purchase of Class A shares under the Letter
will be made at the public offering price (including the sales
charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to
purchase shares, but if the investor's purchases of shares within
the Letter of Intent period, when added to the value (at offering
price) of the investor's holdings of shares on the last day of that
period, do not equal or exceed the intended purchase amount, the
investor agrees to pay the additional amount of sales charge
applicable to such purchases, as set forth in "Terms of Escrow,"
below (as those terms may be amended from time to time). The
investor agrees that shares equal in value to 5% of the intended
purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be
bound by the terms of the Prospectus, this Statement of Additional
Information and the Application used for such Letter of Intent, and
if such terms are amended, as they may be from time to time by the
Fund, that those amendments will apply automatically to existing
Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer
funds by OppenheimerFunds prototype 401(k) plans under a Letter of
Intent, the Transfer Agent will not hold shares in escrow. If the
intended purchase amount under the Letter entered into by an
OppenheimerFunds prototype 401(k) plan is not purchased by the plan
by the end of the Letter of Intent period, there will be no
adjustment of commissions paid to the broker-dealer or financial
institution of record for accounts held in the name of that plan.
If the total eligible purchases made during the Letter of
Intent period do not equal or exceed the intended purchase amount,
the commissions previously paid to the dealer of record for the
account and the amount of sales charge retained by the Distributor
will be adjusted to the rates applicable to actual purchases. If
total eligible purchases during the Letter of Intent period exceed
the intended purchase amount and exceed the amount needed to
qualify for the next sales charge rate reduction set forth in the
applicable prospectus, the sales charges paid will be adjusted to
the lower rate, but only if and when the dealer returns to the
Distributor the excess of the amount of commissions allowed or paid
to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the
investor's account at the net asset value per share in effect on
the date of such purchase, promptly after the Distributor's receipt
thereof.
In determining the total amount of purchases made under a
Letter, shares redeemed by the investor prior to the termination of
the Letter of Intent period will be deducted. It is the
responsibility of the dealer of record and/or the investor to
advise the Distributor about the Letter in placing any purchase
orders for the investor during the Letter of Intent period. All
of such purchases must be made through the Distributor.
Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in
value up to 5% of the intended purchase amount specified in the
Letter shall be held in escrow by the Transfer Agent. For example,
if the intended purchase amount is $50,000, the escrow shall be
shares valued in the amount of $2,500 (computed at the public
offering price adjusted for a $50,000 purchase). Any dividends and
capital gains distributions on the escrowed shares will be credited
to the investor's account.
2. If the intended purchase amount specified under the Letter
is completed within the thirteen-month Letter of Intent period, the
escrowed shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent
period the total purchases pursuant to the Letter are less than the
intended purchase amount specified in the Letter, the investor must
remit to the Distributor an amount equal to the difference between
the dollar amount of sales charges actually paid and the amount of
sales charges which would have been paid if the total amount
purchased had been made at a single time. Such sales charge
adjustment will apply to any shares redeemed prior to the
completion of the Letter. If such difference in sales charges is
not paid within twenty days after a request from the Distributor or
the dealer, the Distributor will, within sixty days of the
expiration of the Letter, redeem the number of escrowed shares
necessary to realize such difference in sales charges. Full and
fractional shares remaining after such redemption will be released
from escrow. If a request is received to redeem escrowed shares
prior to the payment of such additional sales charge, the sales
charge will be withheld from the redemption proceeds.
4. By signing the Letter, the investor irrevocably
constitutes and appoints the Transfer Agent as attorney-in-fact to
surrender for redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter)
include (a) Class A shares sold with a front-end sales charge or
subject to a Class A contingent deferred sales charge, (b) Class B
shares acquired subject to a contingent deferred sales charge, and
(c) Class A or B shares acquired in exchange for either (i) Class
A shares of one of the other Oppenheimer funds that were acquired
subject to a Class A initial or contingent deferred sales charge or
(ii) Class B shares of one of the other Oppenheimer funds that were
acquired subject to a contingent deferred sales charge.
6. Shares held in escrow hereunder will automatically be
exchanged for shares of another fund to which an exchange is
requested, as described in the section of the Prospectus entitled
"How to Exchange Shares," and the escrow will be transferred to
that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from
a bank account, a check (minimum $25) for the initial purchase must
accompany the application. Shares purchased by Asset Builder Plan
payments from bank accounts are subject to the redemption
restrictions for recent purchases described in "How To Sell
Shares," in the Prospectus. Asset Builder Plans also enable
shareholders of Oppenheimer Cash Reserves to use those accounts for
monthly automatic purchases of shares of up to four other
Oppenheimer funds. If you make payments from your bank account to
purchase shares of the Fund, your bank account will be
automatically debited normally four to five business days prior to
the investment dates selected in the Account Application. Neither
the Distributor the Transfer Agent nor the Fund shall be
responsible for any delays in purchasing shares resulting from
delays in ACH transmission.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply
to shares purchased by Asset Builder payments. An application
should be obtained from the Distributor, completed and returned,
and a prospectus of the selected fund(s) should be obtained from
the Distributor or your financial advisor before initiating Asset
Builder payments. The amount of the Asset Builder investment may
be changed or the automatic investments may be terminated at any
time by writing to the Transfer Agent. A reasonable period
(approximately 15 days) is required after the Transfer Agent's
receipt of such instructions to implement them. The Fund reserves
the right to amend, suspend, or discontinue offering such plans at
any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders
for the Fund's shares (for example, when a purchase check is
returned to the Fund unpaid) causes a loss to be incurred when the
net asset value of the Fund's shares on the cancellation date is
less than on the purchase date. That loss is equal to the amount
of the decline in the net asset value per share multiplied by the
number of shares in the purchase order. The investor is
responsible for that loss. If the investor fails to compensate the
Fund for the loss, the Distributor will do so. The Fund may
reimburse the Distributor for that amount by redeeming shares from
any account registered in that investor's name, or the Fund or the
Distributor may seek other redress.
Retirement Plans. In describing certain types of employee
benefit plans that may purchase Class A shares without being
subject to the Class A contingent deferred sales charge, the term
"employee benefit plan" means any plan or arrangement, whether or
not "qualified" under the Internal Revenue Code, including, medical
savings accounts, payroll deduction plans or similar plans in which
Class A shares are purchased by a fiduciary or other person for the
account of participants who are employees of a single employer or
of affiliated employers, if the Fund account is registered in the
name of the fiduciary or other person for the benefit of
participants in the plan.
The term "group retirement plan" means any qualified or non-
qualified retirement plan (including 457 plans, SEPs, SARSEPs,
403(b) plans, and SIMPLE plans) for employees of a corporation or
a sole proprietorship, members and employees of a partnership or
association or other organized group of persons (the members of
which may include other groups), if the group has made special
arrangements with the Distributor and all members of the group
participating in the plan purchase Class A shares of the Fund
through a single investment dealer, broker or other financial
institution designated by the group.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and
conditions for redemptions set forth in the Prospectus.
Payments "In Kind". The Prospectus states that payment for
shares tendered for redemption is ordinarily made in cash.
However, the Board of Trustees of the Fund may determine that it
would be detrimental to the best interests of the remaining
shareholders of the Fund to make payment of a redemption order
wholly or partly in cash. In that case the Fund may pay the
redemption proceeds in whole or in part by a distribution "in kind"
of securities from the portfolio of the Fund, in lieu of cash, in
conformity with applicable rules of the Securities and Exchange
Commission. The Fund has elected to be governed by Rule 18f-1
under the Investment Company Act, pursuant to which the Fund is
obligated to redeem shares solely in cash up to the lesser of
$250,000 or 1% of the net assets of the Fund during any 90-day
period for any one shareholder. If shares are redeemed in kind, the
redeeming shareholder might incur brokerage or other costs in
selling the securities for cash. The method of valuing securities
used to make redemptions in kind will be the same as the method the
Fund uses to value its portfolio securities described above under
"Determination of Net Asset Values Per Share" and that valuation
will be made as of the time the redemption price is determined.
Involuntary Redemptions. The Fund's Board of Trustees has
the right to cause the involuntary redemption of the shares held in
any account if the aggregate net asset value of those shares is
less than $200 or such lesser amount as the Board may fix. The
Board of Trustees will not cause the involuntary redemption of
shares in an account if the aggregate net asset value of the shares
has fallen below the stated minimum solely as a result of market
fluctuations. Should the Board elect to exercise this right, it
may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in
question (not less than 30 days), or the Board may set requirements
for granting permission to the Shareholder to increase the
investment, and set other terms and conditions so that the shares
would not be involuntarily redeemed.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of
(i) Class A shares that you purchase subject to an initial sales
charge or Class A contingent deferred sales charge, which was paid
or (ii) Class B shares subject to the Class B contingent deferred
sales charge when you redeemed them. This privilege does not apply
to Class C shares or Class Y shares. The reinvestment may be made
without sales charge only in Class A shares of the Fund or any of
the other Oppenheimer funds into which shares of the Fund are
exchangeable as described in "How to Exchange Shares" below, at the
net asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Distributor for
such privilege at the time of reinvestment. Any capital gain that
was realized when the shares were redeemed is taxable, and
reinvestment will not alter any capital gains tax payable on that
gain. If there has been a capital loss on the redemption, some or
all of the loss may not be tax deductible, depending on the timing
and amount of the reinvestment. Under the Internal Revenue Code,
if the redemption proceeds of Fund shares on which a sales charge
was paid are reinvested in shares of the Fund or another of the
Oppenheimer funds within 90 days of payment of the sales charge,
the shareholder's basis in the shares of the Fund that were
redeemed may not include the amount of the sales charge paid. That
would reduce the loss or increase the gain recognized from the
redemption. However, in that case the sales charge would be added
to the basis of the shares acquired by the reinvestment of the
redemption proceeds. The Fund may amend, suspend or cease offering
this reinvestment privilege at any time as to shares redeemed after
the date of such amendment, suspension or cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of
transfer to the name of another person or entity (whether the
transfer occurs by absolute assignment, gift or bequest, not
involving, directly or indirectly, a public sale). The transferred
shares will remain subject to the contingent deferred sales charge,
calculated as if the transferee shareholder had acquired the
transferred shares in the same manner and at the same time as the
transferring shareholder. If less than all shares held in an
account are transferred, and some but not all shares in the account
would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus
under "How to Buy Shares" for the imposition of the Class B or
Class C contingent deferred sales charge will be followed in
determining the order in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions
from OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans,
401(k) plans, or pension or profit-sharing plans should be
addressed to "Trustee, OppenheimerFunds Retirement Plans," c/o the
Transfer Agent at its address listed in "How To Sell Shares" in the
Prospectus or on the back cover of this Statement of Additional
Information. The request must: (i) state the reason for the
distribution; (ii) state the owner's awareness of tax penalties if
the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption
requirements. Participants (other than self-employed persons
maintaining an account in their own name) in OppenheimerFunds-
sponsored prototype pension, profit-sharing or 401(k) plans may not
directly redeem or exchange shares held for their account under
those plans. The employer or plan administrator must sign the
request. Distributions from pension and profit sharing plans are
subject to special requirements under the Internal Revenue Code and
certain documents (available from the Transfer Agent) must be
completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the
Internal Revenue Code, and IRS Form W-4P (available from the
Transfer Agent) must be submitted to the Transfer Agent with the
distribution request, or the distribution may be delayed. Unless
the shareholder has provided the Transfer Agent with a certified
tax identification number, the Internal Revenue Code requires that
tax be withheld from any distribution even if the shareholder
elects not to have tax withheld. The Fund, the Manager, the
Distributor, the Trustee and the Transfer Agent assume no
responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for
any tax penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and
Brokers. The Distributor is the Fund's agent to repurchase its
shares from authorized dealers or brokers on behalf of their
customers. The shareholder should contact the broker or dealer to
arrange this type of redemption. The repurchase price per share
will be the net asset value next computed after the Distributor
receives the order placed by the dealer or broker, except if the
Distributor receives a repurchase order from a dealer or broker
after the close of the Exchange on a regular business day, it will
be processed at that day's net asset value if the order was
received by the dealer or broker from its customers prior to the
time the Exchange closes (normally 4:00 P.M., but it may be earlier
on some days), and the order was transmitted to and received by the
Distributor prior to its close of business that day (normally 5:00
P.M.). Ordinarily for accounts redeemed by a broker-dealer under
this procedure, payment will be made within three business days
after the shares have been redeemed upon the Distributor's receipt
of the required redemption documents in proper form, with
signature(s) of the registered owners guaranteed on the redemption
document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares
of the Fund valued at $5,000 or more can authorize the Transfer
Agent to redeem shares (minimum $50) automatically on a monthly,
quarterly, semi-annual or annual basis under an Automatic
Withdrawal Plan. Shares will be redeemed three business days prior
to the date requested by the shareholder for receipt of the
payment. Automatic withdrawals of up to $1,500 per month may be
requested by telephone if payments are to be made by check payable
to all shareholders of record and sent to the address of record for
the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from
OppenheimerFunds-sponsored retirement plans may not be arranged on
this basis. Payments are normally made by check, but shareholders
having AccountLink privileges (see "How to Buy Shares") may arrange
to have Automatic Withdrawal Plan payments transferred to the bank
account designated on the OppenheimerFunds New Account Application
or signature-guaranteed instructions. Shares are normally redeemed
pursuant to an Automatic Withdrawal Plan three business days before
the date you select in the Account Application. If a contingent
deferred sales charge applies to the redemption, the amount of the
check or payment will be reduced accordingly. The Fund cannot
guarantee receipt of a payment on the date requested and reserves
the right to amend, suspend or discontinue offering such plans at
any time without prior notice. Because of the sales charge
assessed on Class A share purchases, shareholders should not make
regular additional Class A share purchases while participating in
an Automatic Withdrawal Plan. Class B and Class C shareholders
should not establish withdrawal plans because of the imposition of
the contingent deferred sales charge on such withdrawals (except
where the Class B or Class C contingent deferred sales charge is
waived as described in the Prospectus under "Waivers of Class B and
Class C Sales Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such
plans, as stated below as well as the Prospectus. These provisions
may be amended from time to time by the Fund and/or the
Distributor. When adopted, such amendments will automatically
apply to existing Plans.
Automatic Exchange Plans. Shareholders can authorize the
Transfer Agent (on the OppenheimerFunds Application or signature-
guaranteed instructions) to exchange a pre-determined amount of
shares of the Fund for shares (of the same class) of other
Oppenheimer funds automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Exchange Plan. The
minimum amount that may be exchanged to each other fund account is
$25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to
Exchange Shares" in the Prospectus and below in this Statement of
Additional Information.
Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a
sales charge will be redeemed first and shares acquired with
reinvested dividends and capital gains distributions will be
redeemed next, followed by shares acquired with a sales charge, to
the extent necessary to make withdrawal payments. Depending upon
the amount withdrawn, the investor's principal may be depleted.
Payments made under withdrawal plans should not be considered as a
yield or income on your investment. It may not be desirable to
purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases
when made. Accordingly, a shareholder normally may not maintain an
Automatic Withdrawal Plan while simultaneously making regular
purchases of Class A shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the
"Planholder") who executed the Plan authorization and application
submitted to the Transfer Agent. Neither the Fund nor the Transfer
Agent shall incur any liability to the Planholder for any action
taken or omitted by the Transfer Agent in good faith to administer
the Plan. Certificates will not be issued for shares of the Fund
purchased for and held under the Plan, but the Transfer Agent will
credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder
may be surrendered unendorsed to the Transfer Agent with the Plan
application so that the shares represented by the certificate may
be held under the Plan.
For accounts subject to Automatic Withdrawal Plans,
distributions of capital gains must be reinvested in shares of the
Fund, which will be done at net asset value without a sales charge.
Dividends on shares held in the account may be paid in cash or
reinvested.
Redemptions of shares needed to make withdrawal payments will
be made at the net asset value per share determined on the
redemption date. Checks or AccountLink payments of the proceeds of
Plan withdrawals will normally be transmitted three business days
prior to the date selected for receipt of the payment (receipt of
payment on the date selected cannot be guaranteed), according to
the choice specified in writing by the Planholder.
The amount and the interval of disbursement payments and the
address to which checks are to be mailed or AccountLink payments
are to be sent may be changed at any time by the Planholder by
writing to the Transfer Agent. The Planholder should allow at
least two weeks' time in mailing such notification for the
requested change to be put in effect. The Planholder may, at any
time, instruct the Transfer Agent by written notice (in proper form
in accordance with the requirements of the then-current Prospectus
of the Fund) to redeem all, or any part of, the shares held under
the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will
mail a check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by
writing to the Transfer Agent. A Plan may also be terminated at
any time by the Transfer Agent upon receiving directions to that
effect from the Fund. The Transfer Agent will also terminate a
Plan upon receipt of evidence satisfactory to it of the death or
legal incapacity of the Planholder. Upon termination of a Plan by
the Transfer Agent or the Fund, shares that have not been redeemed
from the account will be held in uncertificated form in the name of
the Planholder, and the account will continue as a dividend-
reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her
executor or guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt,
the Planholder may request issuance of a portion of the Class A
shares in certificated form. Share certificates are not issued for
Class B or Class C shares. Upon written request from the
Planholder, the Transfer Agent will determine the number of Class
A shares for which a certificate may be issued without causing the
withdrawal checks to stop because of exhaustion of uncertificated
shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will
terminate.
If the Transfer Agent ceases to act as transfer agent for the
Fund, the Planholder will be deemed to have appointed any successor
transfer agent to act as agent in administering the Plan.
How to Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be
exchanged only for shares of the same class of other Oppenheimer
funds. Shares of the Oppenheimer funds that have a single class
without a class designation are deemed "Class A" shares for this
purpose. Shares of Oppenheimer funds that have a single Class
without a Class designation are deemed "Class A" shares for this
purpose. All of the Oppenheimer funds offer Class A, Class B and
Class C shares except Oppenheimer Money Market Fund, Inc.,
Centennial Money Market Trust, Centennial Tax Exempt Trust,
Centennial Government Trust, Centennial New York Tax Exempt Trust,
Centennial California Tax Exempt Trust, Centennial America Fund,
L.P., and Daily Cash Accumulation Fund, Inc., which only offer
Class A shares and Oppenheimer Main Street California Tax-Exempt
Fund which only offers Class A and Class B shares, (Class B and
Class C shares of Oppenheimer Cash Reserves are generally available
only by exchange from the same class of shares of other Oppenheimer
funds or through OppenheimerFunds sponsored 401(k) plans). A
current list showing which funds offer which class can be obtained
by calling the Distributor at 1-800-525-7048.
For accounts established on or before March 8, 1996 holding
Class M shares of Oppenheimer Bond Fund for Growth, Class M shares
can be exchanged only for Class A shares of other Oppenheimer
funds. Exchanges to Class M shares of Oppenheimer Bond Fund for
Growth are permitted from Class A shares of Oppenheimer Money
Market Fund, Inc. or Oppenheimer Cash Reserves that were acquired
by exchange from Class M shares. Otherwise no exchanges of any
class of any Oppenheimer fund into Class M shares are permitted.
Class A shares of Oppenheimer funds may be exchanged at net
asset value for shares of any Money Market Fund. Shares of any
Money Market Fund purchased without a sales charge may be exchanged
for shares of Oppenheimer funds offered with a sales charge upon
payment of the sales charge (or, if applicable, may be used to
purchase shares of Oppenheimer funds subject to a contingent
deferred sales charge).
Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds (except
Oppenheimer Cash Reserves) or from any unit investment trust for
which reinvestment arrangements have been made with the Distributor
may be exchanged at net asset value for shares of any of the
Oppenheimer funds.
No contingent deferred sales charge is imposed on exchanges of
shares of either class purchased subject to a contingent deferred
sales charge. However, shares of Oppenheimer Money Market Fund,
Inc. purchased with the redemption proceeds of shares of other
mutual funds (other than funds managed by the Manager or its
subsidiaries) redeemed within the 12 months prior to that purchase
may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales
charge, whichever is applicable. To qualify for that privilege,
the investor or the investor's dealer must notify the Distributor
of eligibility for this privilege at the time the shares of
Oppenheimer Money Market Fund, Inc. are purchased, and, if
requested, must supply proof of entitlement to this privilege. The
Class C contingent deferred sales charge is imposed on Class C
shares acquired by exchange if they are redeemed within 12 months
of the initial purchase of the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an
exchange, the priorities described in "How to Buy Shares" in the
Prospectus for the imposition of the Class B and Class C contingent
deferred sales charge will be followed in determining the order in
which the shares are exchanged. Shareholders should take into
account the effect of any exchange on the applicability and rate of
any contingent deferred sales charge that might be imposed in the
subsequent redemption of remaining shares. Shareholders owning
shares of more than one class of shares must specify whether they
intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written
exchange requests submitted in bulk by anyone on behalf of more
than one account. The Fund may accept requests for exchanges of up
to 50 accounts per day from representatives of authorized dealers
that qualify for this privilege. In connection with any exchange
request, the number of shares exchanged may be less than the number
requested if the exchange or the number requested would include
shares subject to a restriction cited in the Prospectus or this
Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In
those cases, only the shares available for exchange without
restriction will be exchanged.
When exchanging shares by telephone, a shareholder must either
have an existing account in, or obtain and acknowledge receipt of
a prospectus of, the fund to which the exchange is to be made. For
full or partial exchanges of an account made by telephone, any
special account features such as Asset Builder Plans, Automatic
Withdrawal Plans and retirement plan contributions will be switched
to the new account unless the Transfer Agent is instructed
otherwise. If all telephone lines are busy (which might occur, for
example, during periods of substantial market fluctuations),
shareholders might not be able to request exchanges by telephone
and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business
day the Transfer Agent receives an exchange request in proper form
(the "Redemption Date"). Normally, shares of the fund to be
acquired are purchased on the Redemption Date, but such purchases
may be delayed by either fund up to five business days if it
determines that it would be disadvantaged by an immediate transfer
of the redemption proceeds. The Fund reserves the right, in its
discretion, to refuse any exchange request that may disadvantage it
(for example, if the receipt of multiple exchange requests from a
dealer might require the disposition of portfolio securities at a
time or at a price that might be disadvantageous to the Fund).
The different Oppenheimer funds available for exchange have
different investment objectives, policies and risks, and a
shareholder should assure that the Fund selected is appropriate for
his or her investment and should be aware of the tax consequences
of an exchange. For federal income tax purposes, an exchange
transaction is treated as a redemption of shares of one fund and a
purchase of shares of another. "Reinvestment Privilege," above,
discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and
the Transfer Agent are unable to provide investment, tax or legal
advice to a shareholder in connection with an exchange request or
any other investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The
Federal tax treatment of the Fund's dividends and capital gains
distributions is explained in the Prospectus under the caption
"Dividends, Capital Gains and Taxes." Special provisions of the
Internal Revenue Code govern the eligibility of the Fund's
dividends for the dividends-received deduction for corporate
shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends
paid by the Fund which may qualify for the deduction is limited to
the aggregate amount of qualifying dividends (generally dividends
from domestic corporations) which the Fund derives from its
portfolio investments that the Fund has held for a minimum period,
usually 46 days. A corporate shareholder will not be eligible for
the deduction on dividends paid on shares held by the shareholder
for 45 days or less. To the extent that the Fund derives a
substantial portion of its gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not
qualify for the deduction.
Dividends, distributions and the proceeds of the redemption of
Fund shares represented by checks returned to the Transfer Agent by
the Postal Service as undeliverable will be invested in shares of
Oppenheimer Money Market Fund, Inc., as promptly as possible after
the return of such checks to the Transfer Agent, in order to enable
the investor to earn a return on otherwise idle funds.
Under the Internal Revenue Code, by December 31 each year, the
Fund must distribute 98% of its taxable investment income earned
from January 1 through December 31 of that year and 98% of its
capital gains realized in the period from November 1 of the prior
year through October 31 of the current year, or else the Fund must
pay an excise tax on the amounts not distributed. While it is
presently anticipated that the Fund will meet those requirements,
the Fund's Board of Trustees and the Manager might determine in a
particular year that it would be in the best interest of
shareholders for the Fund not to make such distributions at the
required levels and to pay the excise tax on the undistributed
amounts. That would reduce the amount of income or capital gains
available for distribution to shareholders.
Dividend Reinvestment in Another Fund. Shareholders of the Fund
may elect to reinvest all dividends and/or capital gains
distributions in shares of the same class of any of the other
Oppenheimer funds listed in "Reduced Sales Charges," above, at net
asset value without sales charge. To elect this option, a
shareholder must notify the Transfer Agent in writing and either
have an existing account in the fund selected for reinvestment or
must obtain a prospectus for that fund and an application from the
Transfer Agent to establish an account. The investment will be
made at the net asset value per share in effect at the close of
business on the payable date of the dividend or distribution.
Dividends and/or distributions from certain of the Oppenheimer
funds may be invested in shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. The Bank of New York is the Custodian of the Fund's
assets. The Custodian's responsibilities include safeguarding and
controlling the Fund's portfolio securities, collecting income on
the portfolio securities and handling the delivery of such
securities to and from the Fund. The Manager has represented to
the Fund that the banking relationships between the Manager and the
Custodian have been and will continue to be unrelated to and
unaffected by the relationship between the Fund and the Custodian.
It will be the practice of the Fund to deal with the Custodian in
a manner uninfluenced by any banking relationship the Custodian may
have with the Manager and its affiliates. The Fund's cash balances
with the Custodian in excess of $100,000 are not protected by
Federal deposit insurance. Those uninsured balances at times may
be substantial.
Independent Auditors. The independent auditors of the Fund audit
the Fund's financial statements and perform other related audit
services. They also act as auditors for certain other funds
advised by the Manager and its affiliates.
<PAGE>
Appendix A: Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Services
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
Wireless Services
<PAGE>
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer and Shareholder Servicing Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
The Bank of New York
One Wall Street
New York, New York 10015
Independent Auditors
KPMG Peat Marwick LLP
707 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein
114 West 47th Street
New York, New York 10036
<PAGE>
OPPENHEIMER CAPITAL APPRECIATION FUND
FORM N-1A
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
- -------- ---------------------------------
(a) Financial Statements
--------------------
1. Financial Highlights - To be filed by amendment.
2. Independent Auditors' Report - To be filed by
amendment.
3. Statement of Investments: To be filed by amendment.
4. Statement of Assets and Liabilities: To be filed by
amendment.
5. Statement of Operations: To be filed by amendment.
6. Statements of Changes in Net Assets: To be filed by
amendment.
7. Notes to Financial Statements - To be filed by
amendment.
(b) Exhibits
--------
1. (i) Amended and Restated Declaration of Trust
dated December 18, 1996: Filed with Post-Effective Amendment No. 35
to Registrant's Registration Statement, 12/18/96, and incorporated
herein by reference.
2. Amended By-Laws of Oppenheimer Target Fund dated 8/6/87
- - Filed with Registrant's Form SE for its Form N-SAR for the fiscal
year ending 12/31/87 and refiled with Registrant's Post- Effective
Amendment No. 31, 5/1/95, pursuant to Item 102 of Regulation S-T
and incorporated herein by reference.
3. Not applicable.
4. (i) Specimen Share Certificate for Class A shares
of Oppenheimer Target Fund: Filed with Post-Effective Amendment No.
35 to Registrant's Registration Statement, 12/18/96, and
incorporated herein by reference.
(ii) Specimen Share Certificate for Class B shares
of Oppenheimer Target Fund: Filed with Post-Effective Amendment No.
35 to Registrant's Registration Statement, 12/18/96, and
incorporated herein by reference.
(iii) Specimen Share Certificate for Class C shares
of Oppenheimer Target Fund: Filed with Post-Effective Amendment No.
35 to Registrant's Registration Statement, 12/18/96, and
incorporated herein by reference.
(iv) Specimen share certificate for Class Y shares
of Oppenheimer Capital Appreciation Fund: Filed herewith.
5. (i) Investment Advisory Agreement dated 6/20/91
between Oppenheimer Target Fund and Oppenheimer Management
Corporation - Filed with Post-Effective Amendment No. 23 to
Registrant's Registration Statement, 2/28/92, and refiled with
Post-Effective Amendment No. 31 to Registrant's Registration
Statement, 5/1/95, pursuant to Item 102 of Regulation S-T and
incorporated herein by reference.
(ii) Amendment dated December 18, 1996 to
Investment Advisory Agreement: Filed with Post-Effective Amendment
No. 35 to Registrant's Registration Statement, 12/18/96, and
incorporated herein by reference.
6. (i) General Distributor's Agreement dated
12/10/92: Filed with Post-Effective Amendment No. 27 to
Registrant's Registration Statement, 3/2/94, and incorporated
herein by reference.
(ii) Form of Oppenheimer Funds Distributor, Inc.
Dealer Agreement: Filed with Post-Effective Amendment No. 14 to the
Registration Statement of Oppenheimer Main Street Funds, Inc. (Reg.
No. 33-17850), 9/30/94, and incorporated herein by reference.
(iii) Form of Oppenheimer Funds Distributor, Inc.
Broker Agreement: Filed with Post-Effective Amendment No. 14 to the
Registration Statement of Oppenheimer Main Street Funds, Inc. (Reg.
No. 33-17850), 9/30/94, and incorporated herein by reference.
(iv) Form of Oppenheimer Funds Distributor, Inc.
Agency Agreement: Filed with Post-Effective Amendment No. 14 to the
Registration Statement of Oppenheimer Main Street Funds, Inc. (Reg.
No. 33-17850), 9/30/94, and incorporated herein by reference.
(v) Oppenheimer Funds Distributor, Inc. Agreement
with Newbridge Securities, dated 10/1/86: Filed with Post-Effective
Amendment No. 25 to the Registration Statement of Oppenheimer
Growth Fund (Reg. No. 2-45272) dated 11/1/86 and refiled with
Post-Effective Amendment No. 45 of Oppenheimer Growth Fund (Reg.
No. 2-45272), 8/22/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
7. Retirement Plan for Non-Interested Trustees, 6/7/90:
Filed with Post-Effective Amendment No. 97 to the Registration
Statement of Oppenheimer Fund (Reg. No. 2-14586) dated 8/30/90 and
refiled with Post-Effective Amendment No. 45 to the Registration
Statement of Oppenheimer Growth Fund (Reg. No. 2-45272) 8/22/94,
pursuant to Item 102 of Regulation S-T, and incorporated herein by
reference.
8. Custody Agreement dated 11/12/92: Filed with Post-
Effective Amendment No. 25 to Registrant's Registration Statement,
4/23/93, and refiled with Post-Effective Amendment No. 31 to
Registrant's Registration Statement, 5/1/95, pursuant to Item 102
of Regulation S-T and incorporated herein by reference.
9. Not applicable.
10. Opinion and Consent of Counsel dated 5/1/87: Filed
with Post-Effective Amendment No. 11 to Registrant's Registration
Statement, 5/1/87, and refiled with Post-Effective Amendment No. 31
to Registrant's Registration Statement, 5/1/95, pursuant to Item
102 of Regulation S-T and incorporated herein by reference.
11. Independent Auditors' Consent: To be filed by
Amendment.
12. Not applicable.
13. Not applicable.
14. (i) Form of Individual Retirement Account Trust
Agreement: Filed with Post-Effective Amendment No. 21 of
Oppenheimer U.S. Government Trust (Reg. No. 2-76645), 8/25/93, and
incorporated herein by reference.
(ii) Form of prototype Standardized and
Non-Standardized Profit-Sharing Plan and Money Purchase Pension
Plan for self-employed persons and corporations: Filed with
Post-Effective Amendment No. 15 to the Registration Statement of
Oppenheimer Mortgage Income Fund, (Reg. No. 33-6614), 1/19/95, and
incorporated herein by reference.
(iii) Form of Tax Sheltered Retirement Plan and
Custody Agreement for Employees of Public Schools and Tax Exempt
Organizations: Filed with Post-Effective Amendment No. 47 to the
Registration Statement of Oppenheimer Growth Fund (Reg. No.
2-45272), 10/21/94, and incorporated herein by reference.
(iv) Form of Simplified Employee Pension IRA: Filed
with Post-Effective Amendment No. 15 to the Registration Statement
of Oppenheimer Mortgage Income Fund (Reg. No. 33-6614), 1/19/95,
and incorporated herein by reference.
(v) Form of SAR-SEP Simplified Employee Pension
IRA: Filed with Post-Effective Amendment No. 19 to the Registration
Statement for Oppenheimer Integrity Funds (Reg. No. 2-76547),
3/1/94, and incorporated herein by reference.
(vi) Form of Prototype 401(k) plan: Filed with
Post-Effective Amendment No. 7 to the Registration Statement of
Oppenheimer Strategic Income & Growth Fund (Reg. No. 33-47378),
9/28/95, and incorporated herein by reference.
15. (i) Service Plan and Agreement for Class A shares
of Registrant dated 6/10/93: Filed with Post-Effective Amendment
No. 28, 4/29/94, and incorporated herein by reference.
(ii) Distribution and Service Plan for Class B
shares of Registrant dated 11/1/95: Previously filed with
Post-Effective Amendment No. 33 to Registrant's Registration
Statement, 10/26/95, and incorporated herein by reference.
(iii) Distribution and Service Plan for Class C
shares of Registrant dated 12/1/93: Filed with Post-Effective
Amendment No. 27 to Registrant's Registration Statement, 3/2/94,
and incorporated herein by reference.
16. Performance Data Computation Schedule - To be filed
by amendment.
17. Financial Data Schedule for:
(i) Class A shares at 8/31/96: To be filed by
amendment.
(ii) Class B shares at 8/31/96: To be filed by
amendment.
(iii) Class C shares at 8/31/96: To be filed by
amendment.
-- Powers of Attorney (including certified resolutions
of Registrant's Board of Trustees): Previously filed with
Post-Effective Amendment No. 34, 4/17/96, and incorporated herein
by reference (Bridget A. Macaskill) and previously filed (all other
Trustees) with Registrant's Post-Effective Amendment No. 28,
4/29/94, and incorporated herein by reference.
18. OppenheimerFunds Multiple Class Plan under Rule
18f-3 dated 10/24/95: Filed herewith (with Post-Effective Amendment
No. 12 to the Registration Statement of Oppenheimer California
Tax-Exempt Fund (Reg. No. 33-23566), 11/1/95, and incorporated
herein by reference.
Item 25. Persons Controlled by and Under Common Control
with Registrant
- -------- ----------------------------------------------
None.
Item 26. Number of Holders of Securities
- -------- -------------------------------
Number of Record
Holders as of
Title of Class ___________, 1997
- -------------- -----------------
Class A Shares of Beneficial Interest ______
Class B Shares of Beneficial Interest ______
Class C Shares of Beneficial Interest ______
Item 27. Indemnification
- -------- ---------------
Reference is made to the provisions of Article SEVENTH of
Registrant's Declaration of Trust filed as an exhibit to this
Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to trustees, officers and
controlling persons of Registrant pursuant to the foregoing
provisions or otherwise, Registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by Registrant of expenses incurred or paid
by a trustee, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted
by such trustee, officer or controlling person, Registrant will,
unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933
and will be governed by the final adjudication of such issue.
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
(a) OppenheimerFunds, Inc. is the investment adviser of
the Registrant; it and certain subsidiaries and affiliates act in
the same capacity to other registered investment companies as
described in Parts A and B hereof and listed in Item 28(b) below.
(b) There is set forth below information as to any other
business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc.
is, or at any time during the past two fiscal years has been,
engaged for his/her own account or in the capacity of director,
officer, employee, partner or trustee.
<TABLE>
<CAPTION>
Name and Current Position Other Business and Connections During
with OppenheimerFunds, Inc. the Past Two Years
- --------------------------- --------------------------------
<S> <C>
Mark J.P. Anson,
Vice President Vice President of Oppenheimer Real
Asset Management, Inc. ("ORAMI");
formerly Vice President of Equity
Derivatives at Salomon Brothers, Inc.
Peter M. Antos,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Senior
Vice President of HarbourView; prior
to March, 1996 he was the senior
equity portfolio manager for the
Panorama Series Fund, Inc. (the
"Company") and other mutual funds and
pension funds managed by G.R.
Phelps & Co. Inc. ("G.R. Phelps"),
the Company's former investment
adviser, which was a subsidiary of
Connecticut Mutual Life Insurance
Company; was also responsible for
managing the common stock department
and common stock investments of
Connecticut Mutual Life Insurance Co.
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Bruce Bartlett,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Formerly a Vice President and Senior
Portfolio Manager at First of America
Investment Corp.
Rajeev Bhaman,
Assistant Vice President Formerly Vice President (January 1992
- February, 1996) of Asian Equities
for Barclays de Zoete Wedd, Inc.
Robert J. Bishop,
Vice President Assistant treasurer of the
Oppenheimer funds.
George C. Bowen,
Senior Vice President & Treasurer Treasurer of the Oppenheimer funds,
OppenheimerFunds Distributor, Inc.
(the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of
OppenheimerFunds, Inc. (the
"Manager"); Vice President and
Assistant Secretary of the Denver-
based Oppenheimer funds; Vice
President of the Distributor and
HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a
Director of Centennial Asset
Management Corporation
("Centennial"), Vice President,
Treasurer and Secretary of
Shareholder Services, Inc. ("SSI")
and Shareholder Financial Services,
Inc. ("SFSI"), transfer agent
subsidiaries of the Manager;
Director, Treasurer and Chief
Executive Officer of MultiSource
Services, Inc. (July, 1996 -
present); Vice President and
Treasurer of ORAMI (July, 1996 -
present); President Treasurer and
Director of Centennial Capital
Corporation; Vice President and
Treasurer of Main Street Advisers.
Scott Brooks,
Vice President None.
Susan Burton,
Assistant Vice President None.
Adele Campbell,
Assistant Vice President & Assistant
Treasurer: Rochester Division Formerly Assistant Vice President of
Rochester Fund Services, Inc.
Michael Carbuto,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial.
Ruxandra Chivu,
Assistant Vice President None.
H.D. Digby Clements,
Assistant Vice President:
Rochester Division None.
O. Leonard Darling,
Executive Vice President Trustee (1993 - present) of Awhtolia
College - Greece.
Robert A. Densen,
Senior Vice President None.
Sheri Devereux,
Assistant Vice President None.
Robert Doll, Jr.,
Executive Vice President & Director An officer and/or portfolio manager
of certain Oppenheimer funds.
John Doney,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Andrew J. Donohue,
Executive Vice President,
General Counsel and Director Secretary of the Oppenheimer Funds;
Vice President of the Denver-based
Oppenheimer Funds; Executive Vice
President, Director and General
Counsel of the Distributor; President
and a Director of Centennial; Chief
Legal Officer and a Director of
MultiSource; President and a Director
of ORAMI; Executive Vice President,
General Counsel and Director of SFSI
and SSI; formerly Senior Vice
President and Associate General
Counsel of the Manager and the
Distributor.
George Evans,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Edward Everett,
Assistant Vice President None.
Scott Farrar,
Vice President Assistant Treasurer of the
Oppenheimer funds.
Leslie A. Falconio,
Assistant Vice President None.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of the
Distributor; Secretary of
HarbourView, MultiSource and
Centennial; Secretary, Vice President
and Director of Centennial Capital
Corporation; Vice President and
Secretary of Oppenheimer Real Asset
Management, Inc.
Ronald H. Fielding,
Senior Vice President; Chairman:
Rochester Division An officer, Director and/or portfolio
manager of certain Oppenheimer funds;
Presently he holds the following
other positions: Director (since
1995) of ICI Mutual Insurance
Company; Governor (since 1994) of St.
John's College; Director (since 1994
- present) of International Museum of
Photography at George Eastman House;
Director (since 1986) of GeVa
Theatre. Formerly he held the
following positions: formerly,
Chairman of the Board and Director of
Rochester Fund Distributors, Inc.
("RFD"); President and Director of
Fielding Management Company, Inc.
("FMC"); President and Director of
Rochester Capital Advisors, Inc.
("RCAI"); Managing Partner of
Rochester Capital Advisors, L.P.,
President and Director of Rochester
Fund Services, Inc. ("RFS");
President and Director of Rochester
Tax Managed Fund, Inc.; Director
(1993 - 1997) of VehiCare Corp.;
Director (1993 - 1996) of VoiceMode.
John Fortuna,
Vice President None.
Patricia Foster,
Vice President Formerly she held the following
positions: An officer of certain
Oppenheimer funds (May, 1993 -
January, 1996); Secretary of
Rochester Capital Advisors, Inc. and
General Counsel (June, 1993 - January
1996) of Rochester Capital Advisors,
L.P.
Jennifer Foxson,
Assistant Vice President None.
Paula C. Gabriele,
Executive Vice President Formerly, Managing Director (1990-
1996) for Bankers Trust Co.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds. Formerly Vice
President and General Counsel of
Oppenheimer Acquisition Corp.
Linda Gardner,
Vice President None.
Jill Glazerman,
Assistant Vice President None.
Robert Grill,
Vice President Formerly Marketing Vice President for
Bankers Trust Company (1993-1996);
Steering Committee Member,
Subcommittee Chairman for American
Savings Education Council (1995-
1996).
Caryn Halbrecht,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly Vice President of Fixed
Income Portfolio Management at
Bankers Trust.
Elaine T. Hamann,
Vice President Formerly Vice President (September,
1989 - January, 1997) of Bankers
Trust Company.
Glenna Hale,
Director of Investor Marketing Formerly, Vice President (1994-1997)
of Retirement Plans Services for
OppenheimerFunds Services.
Thomas B. Hayes,
Assistant Vice President None.
Barbara Hennigar,
Executive Vice President and
Chief Executive Officer of
OppenheimerFunds Services,
a division of the Manager President and Director of SFSI;
President and Chief executive Officer
of SSI.
Dorothy Hirshman, None.
Assistant Vice President
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Richard Hymes,
Assistant Vice President None.
Jane Ingalls,
Vice President None.
Byron Ingram,
Assistant Vice President None.
Ronald Jamison,
Vice President Formerly Vice President and Associate
General Counsel at Prudential
Securities, Inc.
Frank Jennings,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly, a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Heidi Kagan,
Assistant Vice President None.
Thomas W. Keffer,
Senior Vice President Formerly Senior Managing Director
(1994 - 1996) of Van Eck Global.
Avram Kornberg,
Vice President None.
Joseph Krist,
Assistant Vice President None.
Paul LaRocco,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly, a Securities Analyst for
Columbus Circle Investors.
Michael Levine,
Assistant Vice President None.
Shanquan Li,
Assistant Vice President Director of Board (since 2/96), Chinese
Finance Society; formerly, Chairman
(11/94-
2/96), Chinese Finance Society; and
Director (6/94-6/95),Greater China
Business Networks,
Stephen F. Libera,
Vice President An officer and/or portfolio manager
for certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView; prior to
March 1996, the senior bond portfolio
manager for Panorama Series Fund
Inc., other mutual funds and pension
accounts managed by G.R. Phelps; also
responsible for managing the public
fixed- income securities department at
Connecticut Mutual Life Insurance Co.
Mitchell J. Lindauer,
Vice President None.
David Mabry,
Assistant Vice President None.
Steve Macchia,
Assistant Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of
the Oppenheimer funds; President and
a Director of OAC, HarbourView and
Oppenheimer Partnership Holdings,
Inc.; Director of Oppenheimer Real
Asset Management, Inc.; Chairman and
Director of SSI; Director (since
1993) of Hillsdown Holdings plc,
U.K.; Director (since 1996) of
NASDAQ.
Timothy Martin,
Assistant Vice President Formerly, Vice President, Mortgage
Trading, at S.N. Phelps & Co.,
Salomon Brothers, and Kidder Peabody.
Wesley Mayer,
Vice President Formerly Vice President (January,
1995 - June, 1996) of Manufacturers
Life Insurance Company.
Loretta McCarthy,
Executive Vice President None.
Kevin McNeil,
Vice President Treasurer (September, 1994 - present)
for the Martin Luther King Multi-
Purpose Center (non-profit community
organization); Formerly Vice
President (January, 1995 - April,
1996) for Lockheed Martin IMS.
Tanya Mrva,
Assistant Vice President None.
Lisa Migan,
Assistant Vice President None.
Robert J. Milnamow,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly a Portfolio Manager (August,
1989 - August, 1995) with Phoenix
Securities Group.
Denis R. Molleur,
Vice President None.
Linda Moore,
Vice President Formerly, Marketing Manager (July
1995- November 1996) for Chase
Investment Services Corp.
Tanya Mrva,
Assistant Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Barbara Niederbrach,
Assistant Vice President None.
Robert A. Nowaczyk,
Vice President None.
Richard M. O'Shaugnessy,
Assistant Vice President:
Rochester Division None.
Gina M. Palmieri,
Assistant Vice President None.
Robert E. Patterson,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
John Pirie,
Assistant Vice President Formerly, a Vice President with Cohane
Rafferty Securities, Inc.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the
Distributor.
Jane Putnam,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Russell Read,
Senior Vice President Formerly a consultant for Prudential
Insurance on behalf of the General
Motors Pension Plan.
Thomas Reedy,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly, a Securities Analyst for
the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Vice President None.
Michael S. Rosen
Vice President; President,
Rochester Division An officer and/or portfolio manager
of certain Oppenheimer funds;
Formerly, Vice President (June, 1983
- January, 1996) of RFS, President
and Director of RFD; Vice President
and Director of FMC; Vice President
and director of RCAI; General Partner
of RCA; Vice President and Director
of Rochester Tax Managed Fund Inc.
Richard H. Rubinstein,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly Vice President and Portfolio
Manager/Security Analyst for
Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Assistant Vice President None.
James Ruff,
Executive Vice President None.
Valerie Sanders,
Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Stephanie Seminara,
Vice President Formerly, Vice President of Citicorp
Investment Services
Richard Soper,
Assistant Vice President None.
Nancy Sperte,
Executive Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director Vice Chairman and Trustee of the New
York-based Oppenheimer Funds;
formerly Chairman of the Manager and
the Distributor.
Richard A. Stein,
Vice President: Rochester Division Assistant Vice President (since 1995)
of Rochester Capitol Advisors, L.P.
Arthur Steinmetz,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Ralph Stellmacher,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
John Stoma,
Senior Vice President, Director
Retirement Plans Formerly Vice President of U.S. Group
Pension Strategy and Marketing for
Manulife Financial.
Michael C. Strathearn,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; a Vice
President of HarbourView; prior to
March 1996, an equity portfolio
manager for Panorama Series Fund,
Inc. and other mutual funds and
pension accounts managed by G.R.
Phelps.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director of Centennial;
formerly President and Director of
OAMC, and Chairman of the Board of
SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds;
formerly Managing Director of
Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Ashwin Vasan,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Dorothy Warmack,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds.
Jerry Webman,
Senior Vice President Director of New York-based tax-exempt
fixed income Oppenheimer funds;
Formerly, Managing Director and Chief
Fixed Income Strategist at Prudential
Mutual Funds.
Christine Wells,
Vice President None.
Joseph Welsh,
Assistant Vice President None.
Kenneth B.White,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; a
Chartered Financial Analyst; Vice
President of HarbourView; prior to
March 1996, an equity portfolio
manager for Panorama Series Fund,
Inc. and other mutual funds and
pension funds managed by G.R. Phelps.
William L. Wilby,
Senior Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of HarbourView.
Carol Wolf,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial; Vice
President, Finance and Accounting and
member of the Board of Directors of
the Junior League of Denver, Inc.;
Point of Contact: Finance Supporters
of Children; Member of the Oncology
Advisory Board of the Childrens
Hospital; Member of the Board of
Directors of the Colorado Museum of
Contemporary Art.
Caleb Wong,
Assistant Vice President None.
Robert G. Zack,
Senior Vice President and
Assistant Secretary, Associate
General Counsel Assistant Secretary of the
Oppenheimer funds; Assistant
Secretary of SSI and SFSI.
Jill Zachman,
Assistant Vice President:
Rochester Division None.
Arthur J. Zimmer,
Vice President An officer and/or portfolio manager
of certain Oppenheimer funds; Vice
President of Centennial.
</TABLE>
The Oppenheimer Funds include the New York-based Oppenheimer
Funds, the Denver-based Oppenheimer Funds and the Oppenheimer/Quest
Rochester Funds, as set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Multiple Strategies Fund
Oppenheimer California Municipal Fund
Oppenheimer Capital Appreciation Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer International Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Municipal Trust
Oppenheimer New York Municipal Fund
Oppenheimer Fund
Oppenheimer Series Fund, Inc.
Oppenheimer Municipal Bond Fund
Oppenheimer U.S.Government Trust
Oppenheimer World Bond Fund
Oppenheimer Developing Markets Fund
Quest/Rochester Funds
- ---------------------
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest For Value Funds
Oppenheimer Quest Capital Value Fund, Inc.
Oppenheimer Bond Fund For Growth
Rochester Fund Municipals
Limited Term New York Municipal Fund
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Income Fund
Oppenheimer Municipal Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Panorama Series Fund, Inc.
Oppenheimer Real Asset Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, the Quest Funds, OppenheimerFunds
Distributor, Inc., HarbourView Asset Management Corp.,
Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York,
New York 10048-0203.
The address of the Denver-based Oppenheimer Funds,
Shareholder Financial Services, Inc., Shareholder
Services, Inc., OppenheimerFunds Services, Centennial
Asset Management Corporation, Centennial Capital Corp.,
and Oppenheimer Real Asset Management, Inc. is 6803 South
Tucson Way, Englewood,Colorado 80012.
The address of MultiSource Services, Inc. is 1700 Lincoln
Street, Denver, Colorado 80203.
The address of the Rochester-based funds is 350 Linden
Oaks, Rochester, New York 14625-2807.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the
Distributor of the Registrant's shares. It is also the Distributor
of each of the other registered open-end investment companies for
which OppenheimerFunds, Inc. is the investment adviser, as
described in Part A and B of this Registration Statement and listed
in Item 28(b) above.
(b) The directors and officers of the Registrant's
principal underwriter are:
<TABLE>
<CAPTION>
Name & Principal Positions & Offices Positions & Offices
Business Address with Underwriter with Registrant
- ---------------- ------------------- -----------------
<S> <C> <C>
George C. Bowen(1) Vice President and Vice President and
Treasurer Treasurer of the
Oppenheimer funds.
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Maryann Bruce(2) Senior Vice President; None
Director: Financial
Institution Division
Robert Coli Vice President None
12 White Tail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce de Leon Ave.
Decatur, GA 30030
William Coughlin Vice President None
542 West Surf - #2N
Chicago, IL 60657
Mary Crooks(1)
E. Drew Devereaux(3) Assistant Vice President None
Rhonda Dixon-Gunner(1) Assistant Vice President None
Andrew John Donohue(2) Executive Vice Secretary of
President & Director the Oppen-heimer
funds.
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
Todd Ermenio Vice President None
11011 South Darlington
Tulsa, OK 74137
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
George Fahey Vice President None
201 E. Rund Grove Rd.
#26-22
Lewisville, TX 75067
Katherine P. Feld(2) Vice President None
& Secretary
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding(3) Vice President None
Reed F. Finley Vice President None
1657 Graefield
Birmingham, MI 48009
Wendy Fishler(2) Vice President None
Ronald R. Foster Senior Vice President None
11339 Avant Lane
Cincinnati, OH 45249
Patricia Gadecki Vice President None
950 First St., S.
Suite 204
Winter Haven, FL 33880
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President None
5506 Bryn Mawr
Dallas, TX 75209
Ralph Grant(2) Vice President/National None
Sales Manager
Sharon Hamilton Vice President None
720 N. Juanita Ave.,#1
Redondo Beach, CA 90277
Byron Ingram(2) Assistant Vice President None
Mark D. Johnson Vice President None
129 Girard Place
Kirkwood, MO 63105
Michael Keogh(2) Vice President None
Richard Klein Vice President None
4820 Fremont Avenue So.
Minneapolis, MN 55409
Daniel Krause Vice President None
13416 Larchmere Square
Shaker Heights, OH 44120
Ilene Kutno(2) Assistant Vice President None
Todd Lawson Vice President None
3333 E. Bayaud Avenue
Unit 714
Denver, CO 80209
Wayne A. LeBlang Senior Vice President None
23 Fox Trail
Lincolnshire, IL 60069
Dawn Lind Vice President None
7 Maize Court
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Todd Marion Vice President None
21 N. Passaic Avenue
Chatham,N.J. 07928
Marie Masters Vice President None
520 E. 76th Street
New York, NY 10021
John McDonough Vice President None
P.O. Box 760
50 Riverview Road
New Castle, NH 03854
Tanya Mrva(2) Assistant Vice President None
Laura Mulhall(2) Senior Vice President None
Charles Murray Vice President None
18 Spring Lake Drive
Far Hills, NJ 07931
Wendy Murray Vice President None
32 Carolin Road
Upper Montclair, NJ 07043
Chad V. Noel Vice President None
3238 W. Taro Lane
Phoenix, AZ 85027
Joseph Norton Vice President None
2518 Fillmore Street
San Francisco, CA 94115
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Kevin Parchinski Vice President None
1105 Harney St., #310
Omaha, NE 68102
Randall Payne Vice President None
3530 Providence Plantation Way
Charlotte, NC 28270
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
1777 Larimer St. #807
Denver, CO 80202
Tilghman G. Pitts, III(2) Chairman & Director None
Elaine Puleo(2) Vice President None
Minnie Ra Vice President None
895 Thirty-First Ave.
San Francisco, CA 94121
Michael Raso Vice President None
16 N. Chatsworth Ave.
Apt. 301
Larchmont, NY 10538
John C. Reinhardt(3) Vice President None
Douglas Rentschler Vice President None
867 Pemberton
Grosse Pointe Park, MI
48230
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Michael S. Rosen(3) Vice President None
Kenneth Rosenson Vice President None
3802 Knickerbocker Place
Apt. #3D
Indianapolis, IN 46240
James Ruff(2) President None
Timothy Schoeffler Vice President None
1717 Fox Hall Road
Washington, DC 77479
Michael Sciortino Vice President None
785 Beau Chene Drive
Mandeville, LA 70471
Robert Shore Vice President None
26 Baroness Lane
Laguna Niguel, CA 92677
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Andrew Sweeny Vice President None
5967 Bayberry Drive
Cincinnati, OH 45242
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President None
8116 Arlingon Blvd.
#123
Falls Church, VA 22042
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Sarah Turpin Vice President None
2735 Dover Road
Atlanta,GA 30327
Gary Paul Tyc(1) Assistant Treasurer None
Mark Stephen Vandehey(1) Vice President None
Marjorie Williams Vice President None
6930 East Ranch Road
Cave Creek, AZ 85331
(1) 6803 South Tucson Way, Englewood, Colorado 80112
(2) Two World Trade Center, New York, NY 10048-0203
(3) 350 Linden Oaks, Rochester, NY 14625-2807
</TABLE>
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be
maintained by Registrant pursuant to Section 31(a) of the
Investment Company Act of 1940 and rules promulgated thereunder are
in the possession of OppenheimerFunds, Inc. at its offices at 6803
South Tucson Way, Englewood, Colorado 80112.
Item 31. Management Services
- -------- -------------------
Not applicable.
Item 32. Undertakings
- -------- ------------
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933
and/or the Investment Company Act of 1940, the Registrant has duly
caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York
and State of New York on the 27th day of August, 1997.
OPPENHEIMER CAPITAL APPRECIATION FUND
By: /s/ Bridget A. Macaskill*
-------------------------------------
Bridget A. Macaskill, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following
persons in the capacities on the dates indicated:
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Leon Levy* Chairman of the August 27, 1997
- -------------- Board of Trustees
Leon Levy
/s/ Bridget A. Macaskill* President (Principal August 27, 1997
- ------------------------- Executive Officer)
Bridget A. Macaskill and Trustee
/s/ Donald W. Spiro* Trustee August 27, 1997
- --------------------
Donald W. Spiro
/s/ George Bowen* Treasurer and August 27, 1997
- ----------------- Principal Financial
George Bowen and Accounting
Officer
/s/ Robert G. Galli* Trustee August 27, 1997
- --------------------
Robert G. Galli
/s/ Benjamin Lipstein* Trustee August 27, 1997
- ----------------------
Benjamin Lipstein
/s/ Kenneth A. Randall* Trustee August 27, 1997
- -----------------------
Kenneth A. Randall
/s/ Sidney M. Robbins* Trustee August 27, 1997
- ----------------------
Sidney M. Robbins
/s/ Russell S. Reynolds, Jr.* Trustee August 27, 1997
- -----------------------------
Russell S. Reynolds, Jr.
/s/ Pauline Trigere* Trustee August 27, 1997
- --------------------
Pauline Trigere
/s/ Elizabeth B. Moynihan* Trustee August 27, 1997
- --------------------------
Elizabeth B. Moynihan
/s/ Clayton K. Yeutter* Trustee August 27, 1997
- -----------------------
Clayton K. Yeutter
/s/ Edward V. Regan* Trustee August 27, 1997
- --------------------
Edward V. Regan
*By: /s/ Robert G. Zack
- --------------------------------
Robert G. Zack, Attorney-in-Fact
/TABLE
<PAGE>
OPPENHEIMER CAPITAL APPRECIATION FUND
Post-Effective Amendment No. 37
Registration No. 2-69719
EXHIBIT INDEX
Form N-1A
Item No. Description
- --------- -----------
24(b)(4)(iv) Specimen Share Certificate for Class Y Shares
Exhibit 24(b)(4)(iv)
OPPENHEIMER CAPITAL APPRECIATION FUND
Class Y Share Certificate (8-1/2" x 11")
I. FRONT OF CERTIFICATE (All text and other matter lies within 8-
1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER [of shares]
(upper right corner) [share certificate no.] XX-000000
(upper right box, CLASS Y SHARES below cert. no.)
(centered below boxes) OPPENHEIMER CAPITAL APPRECIATION FUND
A MASSACHUSETTS BUSINESS TRUST
(at left) THIS IS TO CERTIFY THAT
(at right) SEE REVERSE FOR CERTAIN DEFINITIONS
(box with number)
CUSIP
(at left) is the owner of
(centered) FULLY PAID CLASS Y SHARES OF BENEFICIAL INTEREST OF
OPPENHEIMER CAPITAL APPRECIATION FUND
(hereinafter called the "Fund"), transferable only on the
books of the Fund by the holder hereof in person or by duly
authorized attorney, upon surrender of this certificate
properly endorsed. This certificate and the shares
represented hereby are issued and shall be held subject to all
of the provisions of the Declaration of Trust of the Fund to
all of which the holder by acceptance hereof assents. This
certificate is not valid until countersigned by the Transfer
Agent.
WITNESS the facsimile seal of the Fund and the signatures of
its duly authorized officers.
(at left of seal) Dated: (at right of seal)
(signature) (signature)
/s/ George Bowen /s/ Bridget A. Macaskill
- ---------------- ------------------------
TREASURER PRESIDENT
(centered at bottom) 1-1/2" diameter facsimile seal with legend
OPPENHEIMER CAPITAL APPRECIATION FUND
SEAL
1987
COMMONWEALTH OF MASSACHUSETTS
(at lower right, printed vertically)
Countersigned
OPPENHEIMERFUNDS SERVICES
[A DIVISION OF OPPENHEIMERFUNDS, INC.]
Denver (CO.) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the
face of this certificate, shall be construed as though they were
written out in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with rights
of survivorship and not as tenants in common
UNIF GIFT/TRANSFER MIN ACT - ___________ Custodian _____________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not on above list.
For Value Received ................ hereby sell(s), assign(s) and
transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_________________________________________________________________
(Please print or type name and address of assignee)
_________________________________________________ Class Y Shares of
beneficial interest represented by the within certificate, and do
hereby irrevocably constitute and appoint ____________________
Attorney to transfer the said shares on the books of the within
named Fund with full power of substitution in the premises.
Dated: ______________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment
vertically to must correspond with the name(s) as written
right of above upon the face of the certificate in every
paragraph) particular without alteration or enlargement
or any change whatever.
(text printed Signatures must be guaranteed by a financial
in box to left institution of the type described in the
of signature(s)) current prospectus of the Fund.
(printed to the left): PLEASE NOTE: This document contains a
watermark when viewed at an angle. It is invalid without this
watermark:
(printed to the right): OppenheimerFunds "four hands" logotype.
______________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
certific\320cert.y
